appman999

Same as me then, my Gracious Complaint in mid 2022 to reduce my CGT to 28% on 50% of nett gain was accepted although I believe there are time limits on claims.

As said above apparently since last year this no longer applies and you are taxed on 50% at the tax band applicable after declaring (but not paying tax on) your UK income (probably actually worldwide income?)

wellinever

Work out UK tax burden for capital gains here, using this simple calculator (allowance to go from £12,300 down to £6000 from April 2023)
https://taxscouts.com/calculator/capital-gains-tax/

Red Eric

You might want to have a word with your fiscal rep, assuming they have some professional knowledge of the tax system, about the specific provisions for taxing AL properties, either on cessation of activity or sale.

I don't think it's the same as applies to other property sales. See post 37 by dingg, on this thread for an intro to the topic.

wellinever

Any ideas on what would be the case if one sold a property in Portugal as a PT resident, then made a reinvestment in PT as a resident (paid IMT as a PT resident) and, paid any taxes due in PT. But after 12 months decide to stop residency and tax residency.
I ask this in particular to original IMT payment (house would not now be main home) and then any tax due on property sale ?

Red Eric

Then you would cease to benefit from the exemption or reduction in IMT (as per para 7 of Article 11 of the CIMT, which says change of use within 6 years loses you that benefit)
Ah - if you sold up, then the IMT benefit would still apply.

But you'd have to pay CGT on the sale. Unless you reinvested, or gained an exemption otherwise.

wellinever

I was wondering if on telling Financas of change of address to UK, that they would then demand the difference between resident IMT and non resident. Although as I would see it I would have bought as a resident, and sold as a non resident?? Therefore adding IMT paid to cost of the property

ARCNET

An update for those who may be interested.

The Portuguese Tax Authority has clarified the tax framework of the real estate capital gains obtained by non-residents through Circular Letter no. 20255, of 14 April 2023, as follows:

· Until 31/12/2022, net real estate capital gains are considered at only 50% of their value and taxed autonomously at the special rate of 28% (but only if you complain);

· As from 01/01/2023, real estate capital gains will have to be compulsorily aggregated (at 50% of their value) with the other income obtained by non-residents, and will be subject to the corresponding progressive rates of IRS.

appman999

Thanks very much, very helpful to have confirmation.

wellinever

According to my calcs on a CG of €100,000 with modest income of €17000 the tax would be the same either method.
Presume they would not want to tax overseas income, but just use it to calculate the CG tax rate?
If British tax payer, HMRC would still want the same as before which would mean after paying PT, HMRC would want their cut as well (sale of second home).

appman999

On your example I think the UK liability would be well over double the Portuguese liability

ARCNET

As per the emphasised wording at 4(iii) of the Ofício Circulado, the aggregated foreign income is only used to determine the PT tax rate of the CG.

wellinever

According to my calcs it would be this on the CG amount of €100K

CG at €100,000 in PT on second/holiday home:

a) In PT 50% of gain taxable, so €50,000
UK income of €17,000
As a result total income of €67,000 tax rate would be at 45%
So Gross tax would be €30,150
Less deduction of € 6,500
Net tax to pay in PT at €23,650 = £20,700

b) In UK (at exchange rate of €1.14) CG is £87,700
Income for cgt calc £15,000
Using allowance of £6,000 for CG
Capital gain tax in UK would be £19,300

So no extra tax to pay in UK using Double Taxation
Calcs in UK............

Capital gains tax (CGT) breakdown

You pay no CGT on the first £6,000 that you make

You pay £6,349 at 18% tax rate for the next £35,270 of your capital gains

You pay £13,000 at 28% tax rate on the remaining £46,430 of your capital gains

appman999

My bad, senior moment.

wellinever

But of course, as a tax resident of PT, then the sale of your main home (PT is main home) is covered by PPR in UK and no tax would be required to be paid, even if you are a tax resident and home owner in UK, as long as you spend no more than 90 days in a year in UK property, and can confirm that you spend more than 90 days in the PT property in the year of sale (UK tax year being April - end March following year).
Thats my understanding of it......