# ***CAPITAL GAIN TAX / sold property abroad /dual citizenship



## 1434129 (Mar 10, 2017)

***CAPITAL GAIN TAX / sold property abroad /dual citizenship

Hello
I hope someone had a similar situation or is familiar with that sort of issue, any help, advice appreciated…

I live in the and I want to sell my house abroad. However I am not sure if I really should pay capital gain tax in my case as:
- the piece of land I received many years ago as a gift from parents in
- over many years I built a house on it, never rented it, never lived there
- I live in the UK, having a dual citizenship, however I don’t own any property in the , I live only in a rented place and my house built in is my only own property, so I really don’t understand why should I pay capital gain tax to HMRC at all if I want to sell it 28%! 

Can anyone advice, or share experience what to do ? Thanks


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## skyf (Mar 26, 2015)

Buying/Owning property abroad can involve the Tax rates in different Territtories.

If money has been sent from the UK to build your house in Slovakia, when sold you will need to make a disclosure to HMRC who will want to know the increase in Capital value which in your case will probably show the initial land value as zero as it was a gift and therefore enhance the overall gain.
It maybe ,and you must check, the UK Government and Slovakia Government have a reciprocal arrangement where tax is concerned. This could be to your advantage, but because of the nature of the asset class being in a different Country to your Tax domicile, you are probably best to get advice from an Accountant with International Property experience.


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## 1434129 (Mar 10, 2017)

its tricky situation as even advisors dont have idea as I own it abroad and dont own anything in the UK live in a rent house, so abroad house should be my main residence and tax free, however HMRC has different view on residence and HMRC states into when its the opposite situation to mine,no info on my situation


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## skyf (Mar 26, 2015)

Assume you have never owned a property in the UK? In which case it does seem rather bizarre as in UK one can own a Property ( considered Principle abode) and sell at a profit which is not Taxed providing a replacement home is purchased, I think within 3 years.


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## Moulard (Feb 3, 2017)

skyf said:


> It maybe ,and you must check, the UK Government and Slovakia Government have a reciprocal arrangement where tax is concerned.


The UK-Slovak Republic Tax treaty is a good place to start your research.

https://www.gov.uk/government/publications/slovak-republic-tax-treaties


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## Bevdeforges (Nov 16, 2007)

In very general terms (and I admit I don't know how this applies in the UK), taxes on real property (i.e. building and land) are assessed and paid to the country in which the property is located. You may have to declare the sale and capital gain to the UK tax authorities, but there should be some means of exempting the gain from taxation - or of getting a credit for taxes paid in Slovakia.

Your dual nationality doesn't really have much, if anything, to do with all this. In Slovakia, it sounds as if you have an inherited property on which you have built a house, and then sold the property. It would surprise me a bit if you could claim it as your "residence" since you don't actually live there and haven't done so. So I would expect you may have to pay some sort of capital gains tax to the Slovak government.
Cheers,
Bev


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## iota2014 (Jul 30, 2015)

super1 said:


> ***CAPITAL GAIN TAX / sold property abroad /dual citizenship
> 
> I live in the UK, and I want to sell my house abroad. However I am not sure if I really should pay capital gain tax in my case as:
> - the piece of land I received many years ago as a gift from parents in Slovakia
> ...


This is just my - strictly amateur - understanding of the situation:

If the property was located in the UK, you would be charged capital gains tax on the sale because it's not your principal residence - that is, it's not the house you are living in. It doesn't matter that it's the only property you *own* - what matters is that you're not actually living in it.

The fact that the house is located abroad - in another EU country - may mean that both the UK and Slovakia want to tax it. Which one taxes, and which one gives relief, may depend not only on the treaty but also on your residence status under the UK's Statutory Residence Test, and/or your domicile. See https://www.gov.uk/tax-sell-property/selling-overseas-property

Somebody's almost certainly going to tax it though, is my guess - if not Slovakia, then the UK. A good tax advisor might know ways to minimize the tax.


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## skyf (Mar 26, 2015)

My experience in owning a Property abroad is as follows.

It must be remembered every Tax duresdiction has it own Policy which should be researched.
My property was in NZ and not a Principle home and therefore was subject to a Tax on any gain.
In my case, because of these factors. NZ capital gains Tax was low and would be payable in the local currency. Because there is a reciprocal agreement with the UK I elected to pay into the NZ Tax system. This saved money. (a) because the Tax rate is lower and (b) at the time Currency Exchange rate NZD-GBP was not favourable. My accountant had too make a disclosure to HMRC just for the record because if and when those funds were transferred to the UK, Tax could be levied.
Reading the OP's position and the view of others, it might be worth considering a Temporary move to the house in Slovakia which may then satisfy the Principle Home rule, and then sell, move back to UK. That could avoid Tax altogether. 
The OP should seek his own professional Advice to validate this and any other option.


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## iota2014 (Jul 30, 2015)

skyf said:


> Reading the OP's position and the view of others, it might be worth considering a Temporary move to the house in Slovakia which may then satisfy the Principle Home rule, and then sell, move back to UK.


According to HMG's website:


> You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:
> 
> * you have one home and you’ve lived in it as your main home for all the time you’ve owned it
> 
> ...


https://www.gov.uk/tax-sell-home

Which appears to rule out trying to get the property treated as the Principal Residence.

Whatever the ruling - I could be wrong but it seems to me there's a good chance that the OP will only end up liable for CGT on the gain, provided receipts have been kept to show how much it cost to build. Or maybe a reasonable estimate would be accepted.


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