Capital Gains Tax- expatriate's Glasgow flat

[vladka]

We have been out of the country for two years and have been letting our flat in Glasgow. Looking at staying abroad for foreseeable future. Thinking about selling flat. How would we be affected by C.G.T.?
Would it be better to keep property and continue letting?

[jeffrey]

We have been out of the country for two years and have been letting our flat in Glasgow. Looking at staying abroad for foreseeable future. Thinking about selling flat. How would we be affected by C.G.T.?
Would it be better to keep property and continue letting?

NOTE: Although tax law is the same in whole UK, other areas (e.g. L&T) differ in Scotland from E&W. This may affect reply.

[TaxationPete]

If you are registered as non-resident with HMRC and you intend to stay out of the the UK for 5 or more full FY's then you are exempt from CGT even if you sell now. However sale of world wide asset tax will/mat apply in your country of residence so check it out locally first.

Regards Peter ( Scotland )

[moscow]

If you are registered as non-resident with HMRC and you intend to stay out of the the UK for 5 or more full FY's then you are exempt from CGT even if you sell now. However sale of world wide asset tax will/mat apply in your country of residence so check it out locally first.

Regards Peter ( Scotland )

Pete: If the parents had elected that Flat was Main Domicile (despite living abroad for years or forever) - is CGT still payable?

[TaxationPete]

I answered this thread after deeling with an internation CGT question and I did not read the post properly.
If you sell the flat within 3 years of leaving the property there is no UK CGT. If you moved abroad to obtain work then this would be extended to 4 years or if you returned to the UK and took up residence in the property again for a reasonable time period then sold it there would be no CGT. Parental nomination has no effect here as they have not lived in the flat and it is not there property. Regards Peter

[moscow]

I answered this thread after deeling with an international CGT question and I did not read the post properly.
If you sell the flat within 3 years of leaving the property there is no UK CGT. If you moved abroad to obtain work then this would be extended to 4 years or if you returned to the UK and took up residence in the property again for a reasonable time period then sold it there would be no CGT. Parental nomination has no effect here as they have not lived in the flat and it is not there property. Regards Peter
Pete: from a helpful post you gave me found out that UK Domicile and Non-Resident Rules are very confusing (and sometimes can be interlinked. So for Clarity....

If you are Domiciled in UK (which most people say you should still try to be for NHS and other reasons) are you saying that if you become a UK Non Resident (for tax reasons) --- you will,
1 If you keep UK House be liable for CGT if you do not sell within 3 years of living abroad.
2 OR is it that as it is your main Domicile and Preferred Place of Residence (as opposed to your house abroad) you will not be liable for CGT?
3 OR after 5 years you will not be liable for CGT if living abroad for 5 or more years?

Terribley complicated and very confusing. Your help would be much appreciated - my brains have imploded!

Obviously, the Tax in your chosen foreign abode is another issue.

[TaxationPete]

OK, I have net mentioned Domicle as that is a matter of fact. You can not choose your domicle status that easily and in come cases you may remain domicle in your original country for many years before you could consider changing it. Donicle is very complex and does not really effect the postion. However are you asking this because you are not UK domicle. So to your points.
1/. If you left the country and became non resident then the property still attracts CGT after 36 months but not necessarily in the UK but in the country you are resident in.
2/. Not sure what you mean. ?
3/. If you register as non resident and comply with the rules then after 1 year you can sell a property ( may be a rental property ) and there will be no CGT if you continue to remain out of the UK for 5 'complete' Tax years. However, this is a disposal of world wide asset and CGT or income may well be due in the country you have chsen to live in. A few contries do not have CGT.
To progress your enquiry I think you need to explain your situation.
Regards Peter

[moscow]

OK, I have net mentioned Domicle as that is a matter of fact. You can not choose your domicle status that easily and in come cases you may remain domicle in your original country for many years before you could consider changing it. Donicle is very complex and does not really effect the postion. However are you asking this because you are not UK domicle. So to your points.
1/. If you left the country and became non resident then the property still attracts CGT after 36 months but not necessarily in the UK but in the country you are resident in.
2/. Not sure what you mean. ?
3/. If you register as non resident and comply with the rules then after 1 year you can sell a property ( may be a rental property ) and there will be no CGT if you continue to remain out of the UK for 5 'complete' Tax years. However, this is a disposal of world wide asset and CGT or income may well be due in the country you have chsen to live in. A few contries do not have CGT.
To progress your enquiry I think you need to explain your situation.
Regards Peter

Great Answer, Pete, as always.

I am UK Domiciled: and Web Pages say never to give it up unless you are desperate to avoid, in particular, IHT and\or CGT.

So, in summary, no CGT payable in the UK to HMRC at all on disposal of my UK House which will be rented out (either for more than 5 years or indefinitely) as I will be a Non-Resident - either for more than 5 years or indefinitely.

((p.s. CGT and IHT not payble in the foreign country I am thinking about))

Have I got the hang of this, yet? :-(

[TaxationPete]

Beware some countries charge you income tax on the worldwide gain. Would you care to tell me the country and I'll check for you. Regards Peter

[TaxationPete]

Non Dom is someting used to take advantage of offshore accounts to aviod CG and other Taxes. However that is exactly what it is, avoidance, and more and more anti avoidance measure are being introduced to close these holes. This may interest you :
http://www.taxationweb.co.uk/forum/discuss.php?id=24299
Regards Peter

[moscow]

Beware some countries charge you income tax on the worldwide gain. Would you care to tell me the country and I'll check for you. Regards Peter

Did I get it right then? If so, A Miracle! :-) Thank you so much.

Malaysia does not have CGT or IHT.

[TaxationPete]

Capital gains on disposals of real properties (including shares in a real property company—“RPC”) situated in Malaysia that took place on or before 31 March 2007, were subject to real property gains tax (“RPGT”). The tax was levied at rates ranging from a maximum rate of 30% (for assets held for less than two years) to 0% (for assets held for more than five years). However, any disposals of real properties or RPC shares after 31 March 2007 will not be subject to real property gains tax.

Interest received by a resident individual is subject to income tax at a flat rate of 5%. Interest received on deposits for a period of 12 months or more is tax exempt. Interest received from certain types of bonds or securities is also exempt from tax.

Interest paid to a non-resident individual by commercial or merchant banks or finance companies operating in Malaysia is exempt from tax.

BUT

Note the comment situated in Malaysia Disposal property outside Malaysia was not adrressed in the rule changes in )& You relly need face to face professional advice on this matter.

Regards Peter

[jeffrey]

Note re domicile

One CANNOT be "UK domiciled". There is no single legal system in UK. Domicile here can be:
a. England and Wales; OR
b. Scotland; OR
c. Northern Ireland.

[moscow]

Note re domicile
One CANNOT be "UK domiciled". There is no single legal system in UK. Domicile here can be:
a. England and Wales; OR
b. Scotland; OR
c. Northern Ireland.

Trust a Lawyer to be so accurate ;) - naturally the "civilian term" would mean these Countries!

Why is it everyone recommends that one retains Domicile in - say - Scotland - despite being Non-Resident for years\forever? I can understand that if you are so Monied - you are desparate to avoid ALL IHT and CGT by becoming a Non-Dom.... but for nornal people why this insistence to retain Domicile?

[jeffrey]

Trust a Lawyer to be so accurate
Good! I hope that everyone does (and is).

[TaxationPete]

http://www.hmrc.gov.uk/pdfs/ir20.pdf
For the full story. HMRC do not differentiate and regard it as UK Domiciled. As does the Passport /Crown office. Regards Peter

[moscow]

http://www.hmrc.gov.uk/pdfs/ir20.pdf
For the full story. HMRC do not differentiate and regard it as UK Domiciled. As does the Passport /Crown office. Regards Peter

Thanks Pete ... Accurate as awlays ;) Could you or anyone esle answer this query, please

Why is it everyone recommends that one retains Domicile in - say - Scotland - despite being Non-Resident for years\forever? I can understand that if you are so Monied - you are desparate to avoid ALL IHT and CGT by becoming a Non-Dom.... but for nornal people why this insistence to retain Domicile? Is it to do with being absorbed back into the NHs or other UK Benefits?

[jeffrey]

One does not deliberately 'retain' domicile- it just happens. One has to be domiciled somewhere, and that remains unchanged unless and until a new domicile is acquired.

[TaxationPete]

There are many reasons but Non Dom remittance, Offshore accounts, CGT and IHT are probable the driving forces. As the document tells you, you get a chance to choose you Dom at 16 but after that it is very difficult to change it and can take many years of living in another country to effect any change. Regards Peter

[jeffrey]

There are many reasons but Non Dom remittance, Offshore accounts, CGT and IHT are probable the driving forces. As the document tells you, you gat a *change* to choose you Dom at 16 but after that is is very difficult you change it and can take many years of living in another country to effect a change. Regards Peter
I think that the asterisked word probably means "chance". Anyway, one cannot simply pick a country at random. Domicile is usually one's origin. It's just that, at/after age 16, one can acquire a domicile different from that of one's parents.

[TaxationPete]

Thanks Jeffrey my typing is off form today. I'll edit it. Regards Peter

[tenant29]

mowco,

Since the Capital gains tax rate is Nil in Malaysia, are there any areas you can recommend for Buy to Let investors ?

[TaxationPete]

CGT may be 0% but Income Tax on world wide income has not been established yet. There is no CGT if the Property is in Malaysia under the new rules but I await further information as to world wide disposals. Peter Peter