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Posted Thu, 23 Mar 2023 12:37:51 GMT by Wonson
I am selling a foreign property right now, but it seems the transaction is going to be aborted due to buyer's problem. That may give a chance to take that forfeited deposit as a seller. So my question is: If I take that forfeited deposit, is it considered as taxable income? How can I calculate how much it is taxable?
Posted Thu, 23 Mar 2023 15:45:52 GMT by Wonson
One more question: Any differences if this happened in Private Residence Relief tax-free period?
Posted Wed, 29 Mar 2023 11:25:49 GMT by HMRC Admin 20
Hi Wonson,

S144(7) TCGA92 brings forfeited deposits of purchase money within the charge to tax on capital gains.
It provides that s144 TCGA92 shall apply in relation to a forfeited deposit as it applies in relation to the consideration for an option which is not exercised.
The effect is to treat the forfeit of a deposit as a deemed disposal of an asset separate and distinct from the asset which was to have been disposed of under the contract, see CG12390 - Options: forfeited deposit of purchase money TCGA92/S144 (7)

Thank you.
Posted Thu, 06 Apr 2023 11:35:43 GMT by Wonson
So, does it mean the forfeited deposit is considered part of the capital gains of the sale transaction, and it only needs to be reported after the whole property sale transaction, which the property is finally sold to another buyer, is completed?
Posted Mon, 17 Apr 2023 10:15:02 GMT by HMRC Admin 19

Yes, it does.

Thank you.

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