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Private residence UK and overseas CGT

Private residence UK and overseas CGT

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Hi just come across this trying to answer my question on the web. Hope someone can help??

I've lived in Italy for 20+ years, got my own business and own my own home. Also have a place in the UK which I've had for about 15 but have never lived there, it's been let all the time. Now thinking of selling up and coming back home. Really I want to sell both places and start afresh in the UK but worried about captial gains. If I come back to the one I've ben letting and live in it can I claim its my residence and tax free? And will I have to pay tax here on the place I have in Italy? Yes I know I should get some proper help on this but just need some vague idea at this stage.

Thank you!

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By Matrix
05th Nov 2019 14:20

No it would only be your PPR when you move in. It may be more beneficial to sell both before you move back. Or it may not.

I would find out the Italian tax implications and then engage a UK accountant who knows all your affairs or find a firm which does both.

In any case don’t make decisions based on answers on an internet forum.

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By The Dullard
05th Nov 2019 14:45

I can advise on the Italian side of things. The usual process, as I understand it, is to just not tell the Italian tax authorities, since you're bu88ering off back to blighty.

Wouldn't mention the Italian property to HMRC either tbh. And, if you exchange contracts on selling the UK property before you come back, then, provided it goes on to complete, you won't pay tax on that either

And you can then settle in to your new residence tax-free. The view, the food and the fellow residents won't be all that nice though.

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Replying to The Dullard:
Psycho
By Wilson Philips
05th Nov 2019 14:56

The Dullard wrote:

if you exchange contracts on selling the UK property before you come back, then, provided it goes on to complete, you won't pay tax on that either


Tongue-in-cheek, or am I overlooking something?
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Replying to Wilson Philips:
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By The Dullard
05th Nov 2019 15:06

Two truths and a lie!

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Replying to Wilson Philips:
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By Tax Dragon
05th Nov 2019 15:06

Anyone would think it was Friday.

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By Accountant A
05th Nov 2019 14:48

puzzled wrote:

Yes I know I should get some proper help on this but just need some vague idea at this stage.

Very sensible approach to managing your financial affairs.

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By Accountant A
05th Nov 2019 15:02

puzzled wrote:

If I come back to the one I've ben letting and live in it can I claim its my residence and tax free?

Yes. Absolutely! Why not?

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By David Heaton
05th Nov 2019 15:24

In summary:
1. Take some proper advice before you do anything.
2. If you sell the UK property before you come back, both the UK and Italy will tax you. The double tax treaty gives the UK taxing rights because the property is here. Italy has taxing rights because you live there. You will need to claim double tax relief in Italy. Buona fortuna.
3. If you sell the Italian property after you become resident in the UK, you'll pay tax in the UK, but it should still qualify as your PPR *in UK tax law only* because that is a matter of fact. No idea whether Italy will tax it as well, but the treaty gives it the right, so assume you will be taxed (although it might be at 0% because you've lived in it for a long time).
4. Logically, you sell the Italian property before you cease to be resident there - that way, the UK can't tax the gain (you're non-resident and it's not in the UK), and you get the benefit of any Italian reliefs for it having been your home.
5. Then you move to the UK, wait until after 31 December, and subsequently sell the UK property. It'll be taxable in the UK because it's never been your PPR, but Italy can't tax it, provided you sell in the Italian tax year after you ceased to be resident - bearing in mind that Italy has a calendar year as its tax year. If you spend more than 183 days there in a calendar year, you're resident and taxable.
6. Don't forget 1. above. It's much more complex than what's summarised here, and you need help from someone who understands both UK and Italian law.

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By carnmores
05th Nov 2019 17:35

it was rented out so will not qualify for full PPR relief but you may be entitled to some.

also if you sell it while non resident there are additional tax surprises that need to be addressed

and the rules are changing soon

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