shoreditch

Hi I was wondering if anyone can help with a CGT property question.

I co-own a flat in the UK. I will qualify for a partial exemption as I lived there for around 15 months in the last 5 years but am now about to sell it.

As I said I co-own it with a relative so any profit will be split 50 -50 between us. So my question is will my CGT amount be based on the sale value or my half of the the profit - I am assuming I can;t eb taxed on profit that isn't mine but I take nothing for granted with the IRS

Thanks in advance for any help

Pulaski

You are taxed only on your share of the profit. You should be sure to document where you received the funds (if only half), or disbursed the half to the other coowner if all l the proceeds flowed through your account.

If the value coming into your account outside the US exceeds $10,000 it will create a requirement for you to file an FBAR form. This wouldn't apply of funds were wired directly to your US a/c.

shoreditch

Thank you so much for the advice. Is there anything else I will need to submit such as the joint mortgage?

Pulaski

Well you don't get to "submit" such supporting evidence, but you should, absolutely, keep records of such evidence that will be essential if you are audited.

FatFrank

Wait, assuming the OP is non-resident, surely the he doesn't have to pay any significant UK CGT? - as HMRC reset the clock for non-resident CGT from April 6th, 2015? So the only UK CGT due would be on the difference in property value between the properties value on April 6th, 2015 an the sale date? Now, US CGT would be a different matter...

Pulaski

That is mostly correct, however conventionally UK CGT is calculated as the difference between the selling price and the purchase price, prorated for "void periods". In other words, it is assumed that the gain in value accrues evenly over the period of ownership, so nobody needs a valuation as at April 6, 2015, they just need the purchase and selling price, and to prorate the gain between April 6, 2015 and the date of the sale.

There is also indexation allowance, though that has been negligible in recent years, and you have to add capital expenditures to the purchase price to calculate the gross gain (before proration).

FatFrank

Top job, Pulaski! I am just in the process of completing my UK taxes for a UK property sale from last year and you had me worried for a moment that I was going to get nailed in both the US and the UK!