Red Eric

I would imagine because it's nigh-on impossible to see a case for a UK MP to justify any interest in the matter.

I'm open to persuasion, though.

wellinever

Maybe that would change if and when UK applies to join the EEA, when reinvestment would be allowed in UK saving massive PT CGT for many Brits with PT tax residency

Red Eric

Straying well into the realms of fantasy there, wellinever

It's certainly not going to be of any use to Rooftile if it ever happens, since he needs to contest the tax paid as swiftly as possible if indeed there is any chance of a recalculation and it applies in his case.

Besides which, he is not concerned with reinvestment from the sale of a principal residence into another principal residence but rather with the discrepancy between calculation of tax on the gain for resident and non-resident taxpayers on additional property when it's not in his favour.

I presume, though, that neither he nor you will be too bothered if he gets re-assessed under the terms described in those links above and ends up paying considerably less on that gain than a resident taxpayer with the same income he has would pay on an equivalent gain.

wellinever

Rooftiles PT property was clearly a holiday home and not a permanent residence.
Do I take it from that, that a holiday (second home) in PT, for a non PT resident (nor EU resident). can have any taxable capital gain be reduced by 50% on that property?

Red Eric

I don't want to keep hammering this point but there was a totally different method of calculation involved between residents and non residents on the gain, as you yourself pointed out above. Continually referring to one factor, as opposed to both, suggests that the non-resident pays double the tax - which, as you know, is not the case.

Howwever, to answer the question, yes, it seems (if reports are to believed) that the AT had some internal direction to at least temporarily tax non-residents at 28% on 50% of the gain. Whether there was anything else to that is impossible to know, since we are not privy to the alleged internal memo but no, there was no mention of it applying only to residents of other EU member states in anything I encountered during my trawls. That was supposed to apply from December 2021, which was when Rooftile sold his property and would probably be much more favourable than taxing as per for a resident.

Another regime is now in place thanks to the 2023 budget and should put non-residents on an equal footing with residents for tax on capital gains from property sales.

wellinever

So for example, if I was to open an AL on my permanent house, just for holiday lets, as a PT resident, run that for say 2 years, and then sell the property, without any reinvestment would that be elgible for normal tax on capital gains?

dingg

Al is another can of worms

https://www.realestate-algarve.info/...ed-properties/

Red Eric

Looks like a nice maze to rush into! Plenty to harp on about there for anybody lost within it

Not to mention whether it would actually be permissible to have your own primary residence also registered in its entirety as alojamento local.

wellinever

AT just does not know when enough is enough.....suffice it to say, wont be going there.

Red Eric

AT doesn't set the rules on taxation - they're just the agency tasked with applying them and collecting the tax.

Maybe if you took a peek at what the tax for residents on capital gains other than property are, you wouldn't feel so hard done by. Also, bear in mind that tax rates were significantly aggravated as a result of the so-called bailout and also that a large chunk of the working population, through no fault of their own, earn less than the lower limit for income tax.

wellinever

I understand what you say Red, but I just do not believe that a property used as a main home should incur any tax at all when sold. Normally its not just a chattel bought as in investment in order make money. Property only increases in value due to inflation and demand. I would except that maybe some number of years of residence wold be appropriate. But in reality it means, for example, that any older person choosing to downsize in later life, is forced to buy another property at least of equal value in order to pay no tax, bearing in mind that all properties would have increased on a similar basis. But of course IMT is still paid at a high rate. Its no wonder that families dont sell property, but allow it to deteriorate,and prefer to wait until someone dies, such that there is zero CGT or inheritance.

Red Eric

Yes, I can see how much it rankles.

Doubly so, I suppose, for those who've got a reserve principal residence ready and waiting back in Blighty.

wellinever

Heres` a thought......still on subject of CGT in PT as a PT resident,
If a PT resident has owned a property in the UK, which was only ever a principal home when resident in UK, and now sells it what would be the view of PT AT?
As a PT resident would tax be payable on 50% of the gain or 100%

Red Eric

The fact of its having previously been a primary residence will be of no importance.

Tax-wise it will be treated exactly the same as would be the sale of a property in PT ie tax on 50% of the gain, after taking into consideration worldwide income to establish the starting point on the scales.

Score76

Isn't the answer to buy an equally priced property in Spain and live in it for three years when you get to 65, then sell that and move wherever you like CGT free?