Foreign Property - Hard Times Can Bring Hard Luck

With things tough at home, owners of a foreign holiday property may be very tempted to sell and repatriate the proceeds, but take advice before you act. You might think that if the property has fallen in value, there will be no tax implications… but this is not necessarily so.

Consider the example of a holiday home bought in the Eurozone for €500,000 that would have cost about £320,000 at the then rate of exchange. Suppose the property is sold this year at a loss of €50,000. At first glance, you would think that you have suffered a €50,000 loss, so there is nothing to put on your tax return. The problem is that the exchange rate with the Euro is now about €1 = 90p, so the €450,000 would now be worth £405,000, producing a capital gain of £85,000 to put on your tax return, which could lead to a significant Capital Gains Tax (CGT) liability.

Whenever you are considering any substantial transaction, take professional advice. Many unpleasant tax surprises can be avoided with careful planning.

	HMRC Guidance on Tax Residence
	Meeting Long-Term Care Costs
	Falling Asset Prices and Inheritance Tax
	IHT Guidance From the Tax Man
	Start of Year Tax Planning
	Stamp Duty Land Tax: Beginner's Guide
	Unlocking Your Equity - the Choices
	What is Phased Retirement?
	Putting Cash into a Family Business
	How Drawdown Lifetime Mortgages Work
	The Enterprise Investment Scheme
	How Inheritance Tax Works
	IHT Planning and the AIM
	Equity Release
	Should I Buy To Let?
	Are You a Sophisticated Investor?
	Fiscal Help for your Student Children
	Paying For a Permanent Home Care Place
	Selling Your House and Land: Tax Tips
	Unit-linked or With-profits: What's the Difference?

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.