Paying Stamp duty on a foreign house purchase?
Discussion
We are selling our house in the Philippines and have an English friend interested in buying it. Financial exchange will be done in the UK hopefully, in GB£, bank to bank.
What will be the legal ramifications of this, does he need to pay stamp duty, do wife and I need to pay income tax, or capital gains, or what other surprises would there be?
We could say it is just some land we are selling him, rather than a house, or does the long arm of the English law extend far enough to realise what is going on. Price would be less than £200,000 but still not finalised.
What will be the legal ramifications of this, does he need to pay stamp duty, do wife and I need to pay income tax, or capital gains, or what other surprises would there be?
We could say it is just some land we are selling him, rather than a house, or does the long arm of the English law extend far enough to realise what is going on. Price would be less than £200,000 but still not finalised.
King Herald said:
We actually have to pay Philippines CGT on the house when we sell it, 7% I think. Will that affect anything the UK tries to wring out of us?
Are you UK tax resident?You can offset any tax paid in the Phillipines against any UK tax liability.
Edited by Alpinestars on Saturday 22 October 05:13
Alpinestars said:
Are you UK tax resident?
You can offset any tax paid in the Phillipines against any UK tax liability.
I may be wrong but I thought you could only offset if there is a double taxation treaty in place between the two countries. If not, you can end up paying twice - tax in the place of the house and tax here.You can offset any tax paid in the Phillipines against any UK tax liability.
Edited by anonymous-user on Saturday 22 October 05:13
Greg66 said:
I may be wrong but I thought you could only offset if there is a double taxation treaty in place between the two countries. If not, you can end up paying twice - tax in the place of the house and tax here.
Foreign tax credit is primarily a domestic matter, but can be set out in treaties as well. There is a DTA between both countries. The more pertinent question is the residence of the OP.
Alpinestars said:
Foreign tax credit is primarily a domestic matter, but can be set out in treaties as well. There is a DTA between both countries.
The more pertinent question is the residence of the OP.
The first question is is there any gain to be potentially taxed in the first place?The more pertinent question is the residence of the OP.
As a friend is buying it & if not mortgaged he could pay you at your purchase price for the property so no gain showed and he saves stamp duty costs and then pays you the delta in cash "gifting" you funds.
Welshbeef said:
The first question is is there any gain to be potentially taxed in the first place?
As a friend is buying it & if not mortgaged he could pay you at your purchase price for the property so no gain showed and he saves stamp duty costs and then pays you the delta in cash "gifting" you funds.
An easier strategy would be not to report the gain at all if you're going to try to circumvent tax laws with uncommercial plans. As a friend is buying it & if not mortgaged he could pay you at your purchase price for the property so no gain showed and he saves stamp duty costs and then pays you the delta in cash "gifting" you funds.
Other than that, there are IHT implications and OP's friend's base cost in the property is lower than market value, therefore storing a potential deferred tax problem.
Are you tax resident in the UK? I have a few properties in SEA but all the ones I sold have been in wifes name,so no UK issue. I thought your house in the Philippines was your main residence why would the be CGT on that? Is the house in your name? everyone I know with a house in the Philippines the house is in the wifes name. See what your bank/solicitor says, my wife was thinking of selling her house in the UK last year, our solicitor asked a sew questions on residency and then said it was our only u?k residence and they would release the funds from their client account to our bank in Singapore tax free.
Welshbeef said:
King Herald said:
We actually have to pay Philippines CGT on the house when we sell it, 7% I think. Will that affect anything the UK tries to wring out of us?
How much capital gain have you actually made?Berw said:
Are you tax resident in the UK? I have a few properties in SEA but all the ones I sold have been in wifes name,so no UK issue. I thought your house in the Philippines was your main residence why would the be CGT on that? Is the house in your name? everyone I know with a house in the Philippines the house is in the wifes name. See what your bank/solicitor says, my wife was thinking of selling her house in the UK last year, our solicitor asked a sew questions on residency and then said it was our only uk residence and they would release the funds from their client account to our bank in Singapore tax free.
I do a tax return every year, but basically we are both non resident due to simply not being here for more than a month or so in the last six years.The house is in my wife's name.
King Herald said:
I do a tax return every year, but basically we are both non resident due to simply not being here for more than a month or so in the last six years.
The house is in my wife's name.
What income are you declaring on your tax return?The house is in my wife's name.
If you're non resident, the sale of the property won't be subject to CGT in the UK. There are detailed rules on working out your residence position and it gets more complex where you have a home in the UK. Do you have a home in you UK and have you agreed non residence with HMRC?
my lawyer was happy that as the uk house was our only uk residence and we may choose to live in the uk in the future we could sell it tax free as our residence. I am qualified as a uk accountant, and my position was when i got the answer I wanted I stopped asking, in the end we did not sell, as we may infact choose to return, i have a written statement from revenue saying I do not need to a annual return in the UK, dated 1996, and there is nothing there in my name, kids all have foreign passports, bank accounts are in wife's nane and she is not a citizen, and has allowed her residency permit to expire.
Berw said:
my lawyer was happy that as the uk house was our only uk residence and we may choose to live in the uk in the future we could sell it tax free as our residence. I am qualified as a uk accountant, and my position was when i got the answer I wanted I stopped asking, in the end we did not sell, as we may infact choose to return, i have a written statement from revenue saying I do not need to a annual return in the UK, dated 1996, and there is nothing there in my name, kids all have foreign passports, bank accounts are in wife's nane and she is not a citizen, and has allowed her residency permit to expire.
You have 2 outs re UK gains on the Phillipines house/land. A) if you've not visited the UK much in the last 5 years, you should be non resident for these purposes, and therefore no UK capital gain.
B) if you elected for your Phillipines house to be your PPR.
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