New tax rules for non-residents property owners: what you need to know?
Since April 6 2015, the capital gains made by property owners in England are subject to capital gains tax (called NRCGT: Non-Resident Capital Gains Tax). The exchange date is the date taken into account.
How does it work?
Only the part of the gain corresponding to the period subsequent to April 5, 2015 is taxable. In practice, you should either to determine the value at this date (this is the “rebasing”) and calculate the capital gain from this value, or calculate a prorate (“time apportion”) of the taxable gain compared to entire duration of ownership. It is also possible not to practice the prorate (in case of capital loss for example). Consequently, it seems useful to commission an evaluation of your property, or at the very least, to keep elements of evaluation on that date, which will avoid many subsequent debates….
The tax rate applied will be 18% or 28% (according to taxable amounts).
Note that an exemption (“Private Residence Relief”: PRR) may apply if the property constitutes the main residence of the non-resident owner.
Finally, this English tax may be credited against the tax possibly in the country of residence of the owner, depending on the local law and international conventions that apply.
These mechanisms are far from simple and it is highly advised to get in touch with an English lawyer.
Furthermore, if you perceive of rents or pay rents to a non-resident owner, do not forget to declare it to HMRC that will modify the declarative formalities. Some forms are now no longer sent automatically and should be addressed by 5 next July (you can call the Non-Resident Landlord Scheme Helpline: 03000 516 644 or 03000 516 651)
If you have questions, do not hesitate to ask questions to Expatconseil (firstname.lastname@example.org) who will answer you or put you in contact with the appropriate advisor.
Contact Christophe Chambon
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