Selling overseas property

[Arizona11]

I am selling a holiday home in USA and will make a profit both on the selling price, hopefully and the exchange gain of the currency. Is the CGT calculation the same as selling a second home in the U.K.? I have looked on the HMRC site but they show very little regarding overseas property disposal. They mention it in their links but when you go to the explanation page, they only seem to talk about UK property. Thanks.

[Lootman]

I have looked on the HMRC site but they show very little regarding overseas property disposal. They mention it in their links but when you go to the explanation page, they only seem to talk about UK property.

I would assume that a special case is not made for overseas properties because they are taxable in exactly the same way that UK properties would be. You have to do extra computations to convert the net cost basis and net proceeds from USD to GBP, using the FX rate on the two closing dates. But otherwise it is taxed like any other asset, domestic or foreign.

If you had capital expenses to add to your cost basis then you'd also have to convert those to GBP as of their effective date but, again, that's what you'd do with a UK property as well.

The one wrinkle might be if the US federal government or the state of Arizona charged you capital gains tax, or even withheld that from your proceeds like California does. In that case you should be able to apply that as a credit against your UK tax under the terms of the double taxation treaty.

[Arizona11]

Thanks for the reply Lootman. Pretty much what I thought. Shame HMRC don’t simply say “treat as you would UK property”. Fortunately, we have employed a tax specialist in Arizona who is going to look after the tax position over there. She is claiming the tax, taken at source, from the IRS and sending it to us at a later stage.