CGT Tax Break For Expats With Homes In The UK

Expats who own or rent out homes in Britain will come under a new capital gains tax regime from April 6, 2015 that will involve ‘rebasing’ the value of their properties.

Under the new rules, expats will have to pay capital gains tax on any property profits in the UK within 30 days of disposing of a home.

However, the tax is only due on any gain since April 6, 2015.

This gives expats a tax break window.

Any expat who has held back on disposing of a home or buy to let because they have banked a large increase in the value of a home can now sell or gift the property and pay little capital gains tax for some months.

How long depends how property values change in the UK.

Rebasing explained

Rebasing the value means any capital gains tax computation will be worked on the value of the home on April 6, 2015.

For expats, finding this figure will mean having to have a valuation carried out on the property at the time of disposal.

Capital gains tax demands the disposal value for the property is the open market value – the cost an independent buyer would pay, not a discount cost to a friend or relative.

Surveyors are already used to providing rebased property valuations, as another similar exercise took place in March 1982 in a previous overhaul of capital gains tax.

For some expats who may have owned a home they are now selling from prior to this date, two rebased valuations may be needed – in which case they should ask a valuer for a March 1982 valuation and an April 6, 2015 valuation.

Tax reliefs

Expats who do not plan to sell should not bother about spending out a £100 or so on a valuation now – wait until the time of disposal and keep the money in the bank.

Although the government has issued some information about how the new capital gains tax rules for expats will work, no indication of tax rates and allowances for expats have been revealed.

This probably means Chancellor George Osborne intends to flesh out the detail in Budget 2015 on March 18, 2015.

However, capital guidance for expats already details that tax reliefs for those living overseas and owning homes in the UK will be severely restricted.

For instance, to claim private residence relief, which excludes both the time someone lives in a home and an additional 18 month period of non-occupancy from tax, expats have to prove they have spent 90 ‘midnights’ in the home during the tax year.

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