Results 1 to 7 of 7

Thread: Capital Gains on sale of UK Property

  1. #1
    Email problem Mike Simmonds's Avatar
    Join Date
    Aug 2011
    Location
    Bronkhorstspruit
    Posts
    76
    Thanks
    15
    Thanked 29 Times in 20 Posts

    Capital Gains on sale of UK Property

    I have a South African client who after studying, started working in the UK and while resident and a UK Taxpayer bought a 50% share in a residential property, which was also his primary residence.

    3 years ago he left the UK to become a South African resident Taxpayer.

    The UK property was then rented to tenants and UK tax returns submitted disclosing the relevant income and expenditure. This was done vis his personal UK Tax Return. Nothing was disclosed on the SA Tax returns.

    In March last year he sold the UK Property and transferred the bulk of the proceeds back to South Africa.

    Currently that is until next month (April 2015) there is no Capital Gains Tax in the UK in relation to non-UK residents who own residential property, therefore he is not liable for Capital Gains in the UK.

    My question is to what extent is he liable for Capital Gains in South Africa? Would it be only for the time that he was a South African resident?

  2. #2
    Gold Member Houses4Rent's Avatar
    Join Date
    Mar 2014
    Location
    Cape Town
    Posts
    803
    Thanks
    8
    Thanked 56 Times in 52 Posts
    I am guessing here, but from what I hear RSA has a double taxation agreement with UK. As a RSA taxpayer has to declare global income. So your friend has to declare in the UK and RSA. However the tax will not be doubled up due the agreement. Lets say the tax rate in UK is 10% and 15% in RSA. He will pay the 10% in UK and the balance of 5% in RSA.

    Is there anybody more knowledgeable than Mike and me maybe?
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
    083-3115551
    Global Residential Property Investor / Specialized Letting Agent & Property Manager

  3. Thanks given for this post:

    Mike Simmonds (14-Mar-15)

  4. #3
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    It is essentially the same as a local disposal.
    There are a number of complications:
    First would be to work out the fraction applicable to the primary residence. This should be done on a time basis.
    The second would be the exchange rate. Base cost and proceeds should be at the same rate; that ruling at the time of sale.

    Have a look at that portion of the return:

    Click image for larger version. 

Name:	FORCGT.jpg 
Views:	250 
Size:	38.1 KB 
ID:	5420

  5. Thanks given for this post:

    Mike Simmonds (14-Mar-15)

  6. #4
    Email problem Mike Simmonds's Avatar
    Join Date
    Aug 2011
    Location
    Bronkhorstspruit
    Posts
    76
    Thanks
    15
    Thanked 29 Times in 20 Posts
    Thanks Clive

    Appreciate the input. Would the Base Cost be the value at the time that he came to South Africa and chose to be resident?

  7. #5
    Email problem Mike Simmonds's Avatar
    Join Date
    Aug 2011
    Location
    Bronkhorstspruit
    Posts
    76
    Thanks
    15
    Thanked 29 Times in 20 Posts
    Quote Originally Posted by Houses4Rent View Post
    I am guessing here, but from what I hear RSA has a double taxation agreement with UK. As a RSA taxpayer has to declare global income. So your friend has to declare in the UK and RSA. However the tax will not be doubled up due the agreement. Lets say the tax rate in UK is 10% and 15% in RSA. He will pay the 10% in UK and the balance of 5% in RSA.

    Is there anybody more knowledgeable than Mike and me maybe?
    Thank you Houses4Rent remember that, Currently that is until next month (April 2015) there is no Capital Gains Tax in the UK in relation to non-UK residents who own residential property, therefore he is not liable for Capital Gains in the UK.

  8. #6
    Gold Member Houses4Rent's Avatar
    Join Date
    Mar 2014
    Location
    Cape Town
    Posts
    803
    Thanks
    8
    Thanked 56 Times in 52 Posts
    Well, I guess its 0% in the UK then and all of the applicable % in RSA then.
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
    083-3115551
    Global Residential Property Investor / Specialized Letting Agent & Property Manager

  9. Thanks given for this post:

    Mike Simmonds (14-Mar-15)

  10. #7
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    Quote Originally Posted by Mike Simmonds View Post
    Thanks Clive

    Appreciate the input. Would the Base Cost be the value at the time that he came to South Africa and chose to be resident?
    The base cost will be at the time of disposal, at the same exchange rate at which he received the proceeds.

  11. Thanks given for this post:

    Mike Simmonds (15-Mar-15)

Similar Threads

  1. [Question] Capital gains on sale of a property?
    By Justine in forum Tax Forum
    Replies: 5
    Last Post: 13-Mar-15, 02:39 PM
  2. Capital gains tax calculation -please help
    By Basment Dweller in forum Accounting Forum
    Replies: 17
    Last Post: 08-Oct-14, 10:12 AM
  3. [Question] Capital Gains Tax and shares in a CC.
    By PieterPan in forum Tax Forum
    Replies: 5
    Last Post: 25-Nov-12, 08:36 AM
  4. Replies: 1
    Last Post: 19-Jul-12, 06:23 PM
  5. Capital Gains Tax on Primary Residence
    By Cat in forum Tax Forum
    Replies: 0
    Last Post: 18-Apr-11, 09:39 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •