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For. Pty. - loss in foreign currency gain in GBP

Foreign Property with a loss in the foreign currency but a gain when converted to pounds sterling

Permanently UK resident/UK domicile client inherited some money in Australia 13 years ago; built a house in Australia with the money, rented it out (declaring the income in the UK) and has just sold the property.

Based on AUS $ she made a loss of AUS $ 5,000 so no taxes to pay in Australia

However when we calculate the transaction in Pounds Sterling using the exchange rates prevailing at date of purchase and date of sale the transaction shows a gain of almost £40,000 because of the fall in value of the pound against the AUS $.

My understanding is that this is the way the gain has to be calculated for her UK tax return. Unless I am missing something or there is some way round it?

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By Ruddles
12th Sep 2018 15:56

You are missing nothing, unless I'm missing something.

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12th Sep 2018 17:54

If she feels bad about making £40,000, I can PM my bank details so she can get rid of it. I'll even pay her tax for her. Can't say fairer than that.

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16th Sep 2018 12:27

It could have been worse if a foreign currency mortgage had been involved - if that is any consolation.

The sterling values of the loan at neither the date of borrowing nor repayment are taken into account in the CGT computations

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