Reporting CGT on Overseas Property sale

Hi, My mother and I have recently sold a property in France. The property was initially purchased in 1989 by my mother and father and my father passed his share to me when he died in 2002. Originally purchased in French Francs 250k, valued at 48k euros in 2002 and sold for 85k euros in 2024. I understand that we have to use the prevailing rates at the time the transactions took place. However, what about the fluctuations in value due to exchange rates. I have read the following. Quote "Recognising the complexities involved in owning and selling overseas property, the UK tax authorities have introduced enhanced relief measures. These include adjustments for foreign currency fluctuations and allowances for periods of foreign occupancy. Such measures can significantly impact the CGT calculation, potentially reducing the taxable gain. These changes reflect the government’s recognition of the unique challenges faced by individuals owning and selling property abroad, aiming to provide more accurate and fair tax treatment in these situations." Is this correct and how do I quantify this in our situation, especially with the added complication of a change in currency in 1999. How does the official exchange rate of Francs to Euros of 6.55 affect this? The initial comparative value is easy as Sterling was converted and sent abroad, but how would the inheritance transaction be treated? The exchange rate at that time (1.55 euros to the pound) is wildly different to that now (1.19 euros to the pound) which has quite a large effect on the value of the property and the CGT calculations. I also presume this valuation would have no affect on the share held by my mother as she has maintained a half share ownership throughout. On a slightly different note, I understand that I don't have to report this gain until I do my self assessment next April 2025, is this correct? I have read much conflicting advise on this also, via this thread and elsewhere online so need confirmation that I don't need to do anything in 30 days or 60days. My mother does not do a tax return, how and when should she report this gain? Many thanks.

Hi gilkelly,

As you are the legal owner, it is you who is liable. There would need to be a declaration of trust in place to show that you are not the beneficial owner in order for any income/tax to be split.

Thank you.

Thank you Admin 19. We do not have a formal declaration of trust in place. We do have correspondence from our solicitor in Ireland to our accountant explaining the de facto joint ownership and explaining that I was progressing sale and tax matters on behalf of all the beneficiaries (my brothers and I). Would this suffice? Alternatively, could my brothers and I now draw up a declaration of trust confirming the de facto position - that we are all beneficiaries from the proceeds?

Hi Caroline,
The relevant instruction in the CG manual that covers this is:-
CG78310 - Foreign currency: assets acquired or sold for currency
I cannot find anything else in our guidance that mentions exactly what you have quoted, so I assume that is something external.  The basic guidance when selling a property on gov.uk has a section on disposal of foreign property
Tax when you sell property and that just says any such gain is computed as normal unless the customer is non-dom, which you have not indicated you are, neither have you said it was at anytime your only or main residence.
So, as per the guidance at CG78310, the acquisition cost of each share in the property would be the sterling equivalent of the relevant currency at the time of acquisition.
For example, and just using the dates and figures quoted and assuming a 50% share each, the your mother's acquisition cost would be the sterling equivalent of 250/2 = 125k French Francs at her date of acquisition in 1989. Tour acquisition cost would be the sterling equivalent of 24k Euros at the date you inherited your share of the property in 2002.
The consideration for disposal for each of you would be the sterling equivalent of 42.5k euros each at the date of disposal in 2024.
Likewise, any incidental costs of acquisition or disposal and any enhancement expenditure that is still reflected in the value of the property on disposal would be computed at the relevant sterling equivalent rate of the foreign currency at the time of the expenditure.
Thank you.

Hi Adim20, Thanks for the comprehensive reply. Can you advise when exactly we need to report. I understand I can wait till i do my self assessment for 24/25 but what if you don’t normally do a self assessment? I have read conflicting information both on this thread and elsewhere. Many thanks.

Hi gilkelly,

Yes, this would be sufficient.

Thank you.

 

Hi
Yes this would be sufficient.

Thank you Admin 19 and 10. This is very helpful. One last query -a Declaration of Trust would presumably need to be signed by my brothers and myself. We are geographically quite distant from one another which might make this difficult.. Would a copy of a formal Statutory declaration or sworn affidavit from me setting out the de facto position be sufficient for each of them to submit to HMRC in order to verify their proportionate share of expenses and foreign tax credit set against the Capital Gain?

Hi Caroline
You can report this using the real time system anytime prior to 30/12/24. Alternatively you will need to register for self assessment and complete a full return to report this and pay it by 31/01/26.

Hi gilkelly
No - the declaration needs to be signed by all parties.

Posted this a month ago. Can anyone help please? I am a UK resident and have sold property abroad in Ireland. I am reporting capital gain through my oniine self assessment return. As instructed, I have filled in details of gain in Capital Gains section, checked "Capital gains - foreign tax credit relief " box in Foreign income details page and entered all transaction details in foreign capital gains section - including a statement of foreign tax paid (higher than UK liability). Then filled in Capital Gains computation worksheet and elected to use the figures in this worksheet. When I go to view my tax calculation, the form indicates that from the information I have given, it estimates my foreign tax credit relief as £0.00. Is there something wrong with the online form’s calculation?

Hi Joseph
Yes, you need to claim it at the foreign section.

Thank you admin 10. I have filled in all relevant details in the online Capital Gains computation worksheet. I have also completed the the Foreign section. In the page headed "Capital gains - foreign tax credit relief and Special Withholding Tax" I have entered the amount of foreign tax paid in the "foreign Tax Paid" box. Should the online capital Gains computation worksheet not pick this up? How else would I claim foreign tax relief?

Hello, I would like to confirm whether the private residential relief is applicable for overseas properties whilst they were the main and only residence. My wife and I live in Hong Kong and live in a property owned by my wife which has made a gain. I am a UK citizen and have been in Hong Kong for over 5 years. My wife is a HK citizen and never lived in the UK. Scenario 1): We plan to relocate to the UK in the near future and I would like to know if the property will attract UK CGT if we sold the HK property after we move to the UK . From reading the content on your website, it would appear we can claim private residence relief for the duration we lived in the property as our main residence. Gains after this would attract CGT subject to the relief provided for the last 9 months before the sale date. Scenario 2): If we were to let our current home in HK for a period of time before we move to the UK and subsequently sold it after moving to the UK. Would the following be correct: a) Private residence applies from the purchase date until the date we vacate the property. The property value on the date we vacate would be the market value b) CGT would be chargeable on any gains from the moving out date in (a) subject to the relief provided for the last 9 months before the sale date. c) Prior to the sale, UK income tax would be payable on any rental income generated after we relocate to the UK regardless of whether the funds are transferred to the UK or remain in HK (on the assumption that we do not use the remittance basis). As a connected item. If we were to buy a home in the UK to move into as our main residence (before we sold the HK property), we would need to pay the additional (3%) higher rate of SDLT and, if the purchase was whilst we are classified as non-resident a further 2% SDLT could be payable. I understand we can claim back the 2% non-resident SDLT if my wife or I spend 183 days in the UK during a 365 day period starting from 364 days before completion and 365 days after. I would like to know if we are able to also claim back the 3% higher rate SDLT if we sell the HK property within 3 years of buying the UK property. The assumption is that the UK property would then be our main residence. For clarity, we currently own 2 properties in the UK (in my name) which are let to tenants, one of which used to be my main residence before moving to HK. I would be grateful if you could confirm my understanding is correct on the 3 items I have listed. Thank you in advance for you help.

Hi LDLA HK_UK,
I cannot comment on scenarios. If you dispose of a foreign residential property while resident in the UK, then you may have Capital Gains tax to pay on the disposal.  Any Capital Gains tax is calculated using UK rules, which includes private residence relief.  
Have a look at:  HS283 Private Residence Relief (2024) and Capital Gains Tax.
Thank you.

In previous answers HMRC admins wrote that the real time CGT system cannot be used for disposing of overseas property, but only for other types of assets (jewellery etc). But in a more recent post I read: 'Posted 3 months ago by HMRC Admin 10 Response : (...) You can report this using the real time system anytime prior to 30/12/24. Alternatively you will need to register for self assessment and complete a full return to report this and pay it by 31/01/26.' So *can* the real-time CGT system be used for reporting sale of overseas property or not? Do I understand correctly that if you sold an overseas property in June 2024, are there two equally accepted way to report it: - via the ‘real time’ Capital Gains Tax service until 30/12/2024 (and in this case NO self-assessment is needed) - via self-assessment until 31/01/2026 Is this correct?

Hi ,
 

The realtime CGT system can only be used to declare UK related capital gains.  Any foreign capital gains, must be declared in a self assessment tax return. Thank you .

HMRC17 - re your recent post - you say that the realtime CGT system can only be used to declare UK related capital gains and that any foreign capital gains must be declared in a self assessment tax returns. We recently discussed with the HMRC CGT Helpline and they put us through to a tax specialist at HMRC. We were told that a UK Resident / UK domicile selling a residential property in Germany (buy to let) must pay CGT within 60 days of completion. We find it impossible to complete the realtime reporting because the German property does not have a UK Post Code. We cannot complete a 2024/2025 Tax form online because these do not exist yet. HMRC officials tell people that they must pay CGT on foreign residential property within 60 days but nobody explains how we do this. Please can you help?

Hi ,
 

UK residential property must be reported within 60 days - See: Tell HMRC about Capital Gains Tax on UK property or land if you’re not a UK resident . This link also includes the paper form that you can fill in online then print and post . Thank you .

Hi, If I make a deed of gift of an overseas property to my parents, what documentation do I need present to HMRC to report the even and pay the capital gain tax? Thank you