1503 Capital Gains

Has anyone sold their ½ûÂþÌìÌà home recently?
We bought our house in Lunigiana in 2002 and have seen another property we would like to buy. But sadly we shall have to sell our dear Piccolo Sogno. Are we liable for Capital gains in Italy, UK, OR Both??
If so at what percentage?

Category
Legal

Submitted by Anonymous (not verified) on Mon, 10/03/2005 - 13:43

Hey, you guys can't sell!!!

Apart from that thought, the only thing to add to Will's post is to suggest that you might be able to get taper relief on the basis that the house forms part of your business (i.e. renting it out) and that the tax is charged, I believe, at whatever tax rate you pay your income tax at.

Submitted by Anonymous (not verified) on Mon, 10/03/2005 - 14:07

Will,

Many thanks for your quick response. As I understand it, we have owned our house in Luni for 3 years, so I'll be liable for CGT in Italy (depending on declared value on sale) then whatever I have paid in Italy is deducted from my UK liability. But may have discount as I have owned it 3 years. Oh well,
that's about right - your taxed from cradle to grave eh?!

Thank you

Submitted by Anonymous (not verified) on Wed, 10/05/2005 - 13:21

taper relief is available in the UK on all assets sold, the rate depends on how long you have owned the asset and whether it is a business asset or a personal asset. Needless to say you get the higher rate of taper relief on business assets.

The net gain after taper relief is chargeable to capital gains tax at your highest rate of income tax. If you are a 40% taxpayer you will pay cgt at 40%. If you are a basic rate tax payer you will pay at basic rate. If the gain increases your income so that you exceed the basic rate threshold then part of the gain will be taxed at basic rate and part at 40%.

Don't forget you get an annual CGT exemption (tax free amount), currently about £8000. If the property is jointly owned you can use both your exemptions so the first £16000 will be tax free.

You should also check whether, if you do not bring the profits of the sale back to the UK, whether the remittance rule applies. If it does - you will not be taxed on any part of the profits that is left in Italy.

Submitted by Anonymous (not verified) on Thu, 10/06/2005 - 03:35

Yes, but if you are still caught by UK tax regime you still have to calculate the UK capital gains tax (after personal asset taper relief) and then offset any ½ûÂþÌìÌà tax paid. If the ½ûÂþÌìÌà tax is less (and I have no idea which would be the higher), you may have to pay the difference. Unfortunately if the ½ûÂþÌìÌà tax is more you don't get any credit for the excess!