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CGT about a transfer of foreign property ownership

Help needed to determine the scope of relief I can claim

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I and my brother purchased an apartment in Hong Kong in 01/1996(joint tenancy).  I lived in the apartment for 3 years with my mum and brother until I got married. My brother then became the sole person responsible to pay the mortgage and all the expenses related to the apartment.  He and my mum continues to live in the apartment.

I moved with my husband to UK in 11/1998 and lived on a rental property until 2013, we bought our own house. I returned to Hong Kong to visit my family in 2018.  I and my brother decided that it is fair to transfer the apartment to his sole ownership.  We went to the lawyer and the only way to transfer the title is to register it as a sales contract at market value.  My brother repaid me my contribution of mortgage for the first 3 years.

It appears that even though I did not actually received any gains, I am still subjected to capital gain tax based on the contract sales value.  My question is can I reduce the amount of the gain by claiming the principal private residence relief(PPR) between 1996 and 1998, and also the last 18 months before I transferred the title to my brother?  Is there any other relief I can claim if I did not own any property until 2013? Also, I only become a British Citizen in 2009, would this limit my tax liability on this case?

Do I really need to pay for capital gain tax or is there a procedure to prove I did not benefit from the transaction? If I am liable to pay, is it simply a UK tax issue as HK has no capital tax? Would any tax accountant be able to take on the case or I need someone specific on international tax issue?

Replies (2)

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By Accountant A
09th Dec 2019 12:04

CC90017 wrote:

Would any tax accountant be able to take on the case

A competent one should be able to cope.

CC90017 wrote:

or I need someone specific on international tax issue?

If you are confident no tax arises in HK, then you don't need an international tax specialist.

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By Montrose
09th Dec 2019 18:52

Just a couple of observations.
1] UK CGT is calculated based on the sterling values of each step, so if the sterling/HK$ rate worsened between your acquisition and disposal, you could hav an unpleasant shock. This will also affect the consequences of your brother's assumption of the mortgage liability.

2] The rate of CGT is basically 28%, not 20%.

I would recommend you seek professional advice.

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