GeorgeYoung

Does anyone have any expertise on the potential impact of selling a house in the UK on tax affairs in Italy? Presumably any profit would be subject to a tax of some kind? Would that still apply if the house sold for less than the purchase price? Thanks in advance for any helpful guidance.

Pulaski

Tax on property sales is a capital gains tax, so if you sell at a loss there would typically be no gain to tax, and therefore no tax payable.

In the UK there is also an inflation adjustment called "indexation relief", so it is possible, sometimes, to sell at a nominal profit (sale price in number of pounds exceeds purchase price in number of pounds), and still make a tax loss.

There are also other things that you can deduct to reduce a gain or turn a gain into a loss, such as disposal expenses and capital improvements e.g. if you have added an extension, or built a garage.

Note, the sale price must be a "fair market price", so if you sell to a relative at below market price then you would need to use the fair market price as the "deemed disposal price" when calculating any tax due on the sale.

GeorgeYoung

Thanks for that, some handy info.

Would still appreciate any other responses on specific Italian impact. Ta.

modicasa

There is no capital gains tax on property sales in Italy (unless you sell them within 5 years of purchase) , so you would presumably have no tax liability in ITaly on a like for like sale.
The proceeds from your home sale would be then sent into Italy - declare the origin of the money, and if you have also declared the house and paid tax in Italy on your patrimony abroad (IVIE), then that should be the end of the matter. If you havent been paying the IVIE it would be better not to say that the money being brought in is from a house sale....

philat98

If a large sum of money just appears from nowhere in your bank account the AdiE might investigate.

GeorgeYoung

The ideal scenario would be to sell the UK house and not buy another one for the time being. Given the state of the GBP/EUR rate, I'd probably leave the money in the UK account. I'm fully tax resident in Italy these days, so presumably the income would be part of my IVIE declaration as modicasa suggested above?

Thanks for the post modicasa, much appreciated.

modicasa

Well as you would no longer have a house then you should, in theory, just pay the tax on having a bank account abroad and no longer have a liability for IVIE.

GeorgeYoung

Ah yes, of course, I'm confusing my wealth taxes - this is why I pay an accountant!