If you are a UK resident selling overseas property, you may be liable to UK Capital Gains Tax (CGT) on the profit you make. This is the case even if you are not resident in the country where the property is located.
How to calculate CGT on overseas property
To calculate CGT on overseas property, you need to work out the following:
- The acquisition cost of the property: This is the price you paid for the property, plus any costs you incurred in buying it, such as legal fees and estate agent fees.
- The disposal proceeds of the property: This is the price you sold the property for, plus any costs you incurred in selling it, such as legal fees and estate agent fees.
- The taxable gain: This is the difference between the disposal proceeds of the property and the acquisition cost of the property.
CGT is charged on the taxable gain at the following rates:
- 18% for basic rate taxpayers
- 28% for higher rate taxpayers
Reducing your CGT liability
There are a number of ways to reduce your CGT liability, including:
- Annual exemption: You have an annual CGT exemption, which is the amount of taxable gain you can make in a tax year without paying any tax. The annual exemption for 2022/23 is £12,300.
- Principal Private Residence (PPR) relief: If you used the overseas property as your PPR for any period of time, you may be entitled to PPR relief. This relief can reduce your taxable gain by the amount of time you used the property as your PPR.
- Letting relief: If you let out the overseas property for any period of time, you may be entitled to letting relief. This relief can reduce your taxable gain by the amount of rent you received while you let out the property.
Reporting and paying CGT
If you are liable to CGT on the sale of your overseas property, you need to report the gain to HMRC on your Self Assessment tax return. You need to do this within 31 October following the end of the tax year in which you disposed of the property.
You can pay CGT online or by post. If you pay online, you need to do this by 31 January following the end of the tax year in which you disposed of the property. If you pay by post, you need to send your payment to HMRC by 31 July following the end of the tax year in which you disposed of the property.
Getting professional advice
If you are unsure about whether you are liable to CGT on the sale of your overseas property, or how to calculate your CGT liability, you should seek professional advice from a tax advisor.
