Tax when selling a UK property
Do we have to pay capital gains tax, and if so, in which country?
We have heard there will be a tax in France when selling a property in Britain. Can you tell us if this applies in our circumstances?
We are three sisters in our sixties, now selling our deceased parents’ house. Two of us live in France, the eldest in Plymouth. The proceeds will be split three ways.
Given our different circumstances, is there any way of avoiding this; the two in France would also want to convert the money to euros. P.W.
Currently, the sale of UK property by a properly registered Briton now permanently resident in France is exempt from capital gains tax in the UK and in France.
Your UK sister, however, would be liable to tax on the profit element of her share of the sale that exceeded the capital gains tax allowance, which is £10,100.
Any excess profit is then potentially liable to taxation, but, as the rules have changed from June 22, it might be best to seek proper advice in the UK, dependent on the level of income your UK sister has.
From January 1, 2011, nothing changes for your UK sister, but the two of you now permanently resident in the France will become liable to French capital gains tax at 16%, plus the social charges at, currently, 12.1%, making a total charge of 28.1%. This said, there is a teeny deduction against the gain itself of €1,000.
With regards to you bringing the proceeds back to France, that is up to you, but remember that, for French capital gains tax, the sterling amount should be converted into euros at the prevailing exchange rate on the date of completion, so that it can be assessed for taxation.
