CGT on apartment sale in Spain

[Nicky]

Elderly parents have recently sold apartment in Spain. Spanish CGT of (i think) 18% paid in Spain. The property was never let and used simply as a holiday home - main residence remained in UK. The money has now been repatriated to UK, where we wonder whether its is liable to UK CGT.

Any advice welcome. We think CGT is payable in UK, but as there is a Double Taxation Agreement in place Spanish CGT can be deducted from the CGT payable here. Is that right ?

Also, how do we calculate the gain ? Is it simply, as in Spain, worked out in Euros ? Or do we need to take the exchange rate into account and work out the purchase price and the sale price in Sterling ?

[Telometer]

All costs worked out in Sterling on date of transaction, and UK CGT calculated; Spanish CGT deductible against UK CGT.

[TaxationPete]

19% in Spain. Did the purchaser deduct the 3% of asset value retained tax and have you accounted for it in the final CGT. The resulting CGT can be used against you UK CG Liability so depending on your parents incomes ( if jointly owned ) would be 18%, 28% or a combination of both. Regards Peter

[Nicky]

Thanks for the responses. I'll need to have a look at the tax computation done by their adviser in Spain regarding the asset value retained tax. What is it, by the way ?

Does this mean we have to work out the Euro purchase price in Sterling and also the sale price in Sterling ? As the pound has weakened against the euro in recent years, that could mean a bigger gain - in sterling terms at least.

[TaxationPete]

As I said 3% of the asset value. Yes you need to work everything back into Sterling. Remember the costs of acquisition, sales and legal fees are deducible from the gross gain. Regards Peter

[Nicky]

Gosh, this sounds like a nightmare. I know the Spanish CGT calculation took into account all costs involved with purchase and sale and I assume it will be beneficial to do this again for UK CGT. But that means every transaction has to be recalculated back into sterling using the exchange rate on that particular day ? Sounds like fun ! Hmmmm, I guess that even includes the Spanish CGT, itself recalculated back into sterling on the day it was paid. What do the Revenue say ? Tax - it doesn't have to be taxing. Ha.

Anyway, thanks for your help - appreciated.

[wamstax]

Hi there remember that in the UK you are entitled to an annual CGT exemption of £10,100 so that if your parents jointly owned the property and didn't have any other gains in the year they would be UK exempt if the overall gain was less than £20,200. Equally remember that you cannot get a repayment of the Spanish tax so you can deduct it in arriving at the net UK gain/loss if it will not be tax effective to set off against Uk tax .

I am sure that if you run the figures some good soul on here might give you the rough answer without any responsibility to you unless you enter into a fee paying client relationship