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Old Oct 5th 2015, 4:31 pm   #1
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Default Capital gains tax implication - selling house in India to buy one in uk

I will naturalise as a British Citizen next week. I have moved to the UK 6.5 years back from India on employment (work permit) and acquired permanent residency last year in March. I have a house in my name in India (which was gifted by my father) which I want to sell and bring the money to UK to buy a house here instead. Do I have to pay any tax here in UK? Any advice would be appreciated.
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Old Oct 5th 2015, 5:10 pm   #2
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Yes. You have several overlapping issues of:
  • historic acquisition value to you (may be what your father paid for it, not what it was worth when it was gifted to you),
  • changes in exchange rate,
  • indexation allowance (for inflation),
  • allowance for any time that you actually lived in it
  • allowance for any time that you were deemed to have lived in it (time when you were sent overseas by your employer might be included here)
  • the cost of any capital improvements you made, and
  • possible tax credit for any tax paid in India,

so you really need the services of a tax accountant experienced in such matters.
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Old Oct 6th 2015, 8:13 am   #3
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Agree with above. You will have to pay Capital Gains Tax in India, but the rate there is lower than in UK, so you will have to pay the difference in UK.
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Old Oct 6th 2015, 10:11 pm   #4
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

.... it's a lot more complicated than that!
After 6.5 years in the UK you are, for tax purposes, probably non-resident and not-actually-resident in India; you are almost certainly resident and actually resident in the UK; you are also almost certainly non-resident in India for FEMA purposes.
Then there is the question as to whether you were FEMA resident when the house was gifted to you (if not the gift may be invalid - was the gift Registered?) .
If the gift was valid it is still possible you will need RBI permission to sell the property; you will certainly need RBI permission to remit the proceeds to the UK. This would involve either proving that CGT was paid in India, or that you were exempt by reason of non-residency.
You will definitely be liable to UK CGT, but there may be an offset available under the dual-taxation avoidance rules. These, and CGT rules in both countries are complex.
You need an accountant and possibly a lawyer in India.
You need an accountant in the UK.
You need a lot of luck.
You need an enormous amount of patience.

hth - AndyD 8-)
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Old Oct 7th 2015, 11:18 am   #5
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Is Exchange Control an issue ? Can you remit the funds from India easily ?
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Old Oct 7th 2015, 12:14 pm   #6
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Quote:
Originally Posted by scot47 View Post
Is Exchange Control an issue ? Can you remit the funds from India easily ?
Post #4 already mentioned that: "... you will certainly need RBI permission to remit the proceeds to the UK. .... ". (RBI= Reserve Bank of India.)
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Old Oct 14th 2015, 10:03 am   #7
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

I suffer from Abbreviation Allergy, and was unaware of what RBI is !
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Old Oct 14th 2015, 1:21 pm   #8
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Quote:
Originally Posted by scot47 View Post
I suffer from Abbreviation Allergy, and was unaware of what RBI is !
I suffer from chronic excessive inquisitiveness. I am not sure if Google has helped, or just exacerbated the problem.
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Old Oct 18th 2015, 2:39 pm   #9
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Is that the same as being a Nosey Parker ?
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Old Oct 18th 2015, 3:41 pm   #10
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Quote:
Originally Posted by scot47 View Post
Is that the same as being a Nosey Parker ?
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Old Oct 18th 2015, 4:57 pm   #11
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

It takes one to know one !
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Old Oct 20th 2015, 9:48 am   #12
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Default Re: Capital gains tax implication - selling house in India to buy one in uk




#3 and #4 are fairly recent,
#5 (cheque payment only) is a new one on me.

hth AndyD 8-)

p.s. sorry about the size - the online editor lets you reduce the image size but doesn't save it.
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Old Oct 20th 2015, 10:19 am   #13
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Quote:
Originally Posted by a_f_d View Post
...
#5 (cheque payment only) is a new one on me.
Finance Bill 2015 - wef 01/06/2015
(bank transfers and eBanking are also allowed)

AndyD 8-)

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Old Oct 21st 2015, 9:10 am   #14
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Article in the ToI business section today suggests that this clampdown on the 'cash economy' (economist speak for 'black money'?) has blocked over 50% of business in India!

AndyD 8-)
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Old Aug 13th 2016, 3:33 pm   #15
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Default Re: Capital gains tax implication - selling house in India to buy one in uk

Hi,

Since source of income i.e. Property is situated in India, you will be liable to tax in India. However, if you are non resident in India in the year of sale then you should also look at double tax avoidance agreement between India and UK for benefit, if any available. Also you will be required to check foreign exchange regulations before remitting money outside India. Do let me know if you would like to have detailed opinion on the above matter.

Thanks
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