Legislation for overseas buyers/owners is changing

          Legislation for overseas buyers/owners is changing as of 6th April 2015 and this could have significant implication to your investment property should you consider selling your property in the future. After the 6th April 2015 you will be liable for capital gains tax. Now is an opportunity to have a valuation of your property carried out thus meaning any increase in value from when the property was first purchased to 6th April 2015 will not be liable for capital gains tax, only the increase in value after this date.

Below is the detailed explanation of valuation.

Capital Gains Tax

          From 6th April 2015 overseas residents will be exposed to Capital Gains Tax on the relevant amount of profit on disposal of their residential investment properties.

          The amount of capital gain relating to the period prior to 5th April 2015 is not taxable, only the element corresponding to the subsequent period.

FACTS

• Capital Gains Tax will apply to all overseas investors including offshore structures

• Capital Gains Tax will only apply to gains made after 6th April 2015

• The tax rate ranges from 18-28% of the gain made after 6th April 2015

• Capital Gains Tax is payable within 30 days of sale of the property

• The gain can be calculated by apportionment of time or by way of a valuation as at 6th April 2015

• There is no set requirement for a particular type of valuation to be carried out although any valuation can be challenged by HMRC

OUR ADVICE

• Whether you are selling now or in the future we recommend having a valuation carried out at the earliest opportunity whilst market evidence is fresh, although a valuation can also be completed retrospectively when you decide to sell

• Capital Gains Tax can also be mitigated on investments that have exchanged and not yet completed including off plan purchases

• We would advise having a valuation carried out by a suitably qualified RICS professional as evidence of the value of your investment at 6th April 2015 as this would be expected to hold more weight with HMRC than an estate agency market appraisal

• We recommend speaking to your tax advisor regarding how best to mitigate your Capital Gains Tax liability and we can put you in touch with an advisor if required