capital gains tax on flat in Romania


R

RobertL

I wonder if someone could confirm that I have understaood the UK tax
rules correctly as applied to capital gains made on assets abroad.

My wife and I are normal UK residents (in England). I am a UK
citizen. She is both UK and Romanian. She bought a flat in Romania
three years ago and it has appreciated greatly in value since then.

My understanding is this: if she sells the flat, the profit will be
taxed in the UK as a capital gain regardless of whether she actually
transfers the money back to the UK or not.

Is this correct?

In passing, I mention that my wife signed a legal document in Romania
that assigned the rental income from the flat to her sister (who lives
in Romania). The sister keeps the rental income and pays Romanian tax
on in correctly.

many thanks,

Robert
 
Ad

Advertisements

P

PeterSaxton

I wonder if someone could confirm that I have understaood the UK tax
rules correctly as applied to capital gains made on assets abroad.

My wife and I are  normal UK residents (in England).  I am a UK
citizen.  She is both UK and Romanian.  She bought a flat in Romania
three years ago and it has appreciated greatly in value since then.

My understanding is this:  if she sells the flat, the profit will be
taxed in the UK as a capital gain regardless of whether she actually
transfers the money back to the UK or not.

Is this correct?

In passing, I mention that my wife signed a legal document in Romania
that assigned the rental income from the flat to her sister (who lives
in Romania).  The sister keeps the rental income and pays Romanian tax
on in correctly.

many thanks,

Robert
If she's domiciled in the UK she will be taxed on the gain but she
won't if she is not UK domiciled.
 
R

RobertL

If she's domiciled in the UK she will be taxed on the gain but she
won't if she is not UK domiciled.- Hide quoted text -
many thanks, that confirms my understanding, She is domiciled in the
UK.

Robert
 
A

Alec

If she's domiciled in the UK she will be taxed on the gain but she
won't if she is not UK domiciled.- Hide quoted text -
many thanks, that confirms my understanding, She is domiciled in the
UK.'Domicile' is completely different from 'residence' or 'ordinary residence.'
You could live in this country most of your life but still not domiciled
here. Those with a father born outside UK normally inherit his non-UK
domicile, and it's quite difficult to change it. In your wife's case, I
assume her father is Romanian born there, and the fact that she retained her
original nationality and now owns a property there makes it a strong case
that she is domiciled abroad.
Currently the rule is that non-UK domiciles are only taxed on overseas
income and capital gains on a remittance basis, so provided she keeps her
profit offshore, there is no UK tax liability (though there may be in
Romania). The rules are supposed to be changing from next tax year and those
who retain non-UK domicile but resident in UK will have to pay an annual
charge of £30k if their overseas income or capital gain exceeds £2000 a year
(or thereabouts). So to take advantage of current rules, she should realise
capital gain before April 6, but consult a financial adviser first.

Alec
 
T

tim.....

Alec said:
many thanks, that confirms my understanding, She is domiciled in the
UK.
'Domicile' is completely different from 'residence' or 'ordinary
residence.' You could live in this country most of your life but still not
domiciled here. Those with a father born outside UK normally inherit his
non-UK domicile, and it's quite difficult to change it.
It's not that difficult to change. Its sometimes hard to demonstrate that
you have changed it, but the situation of someone born in the UK, to a
foreign father, who then lives the whould of their formative years in the UK
is at the easier end.

tim
 
R

Ronald Raygun

Alec said:
'Domicile' is completely different from 'residence' or 'ordinary
residence.' You could live in this country most of your life but still not
[be] domiciled here.
Yes, you could, but it would be exceptional. A foreigner coming here
and marrying a Brit and settling down and having a family here would
certainly be deemed to be domiciled here. The retention of foreign
domicile would imply there remained a wish in the person's mind at
some point to return to that country forever. If there appears to be
a clear intention to remain here forever, usually because one's ties
to here are stronger than to where home used to be, then domcile is
here.
Those with a father born outside UK normally inherit his
non-UK domicile,
Yes, initially, at birth.
and it's quite difficult to change it.
Not at all.
In your wife's
case, I assume her father is Romanian born there, and the fact that she
retained her original nationality and now owns a property there makes it a
strong case that she is domiciled abroad.
I disagree. Domicile is easier to change than nationality, in the sense
that domicile change just happens by itself, it does not happen as a result
of an administrative act, whereas nationality change involves jumping
through all sorts of hoops. It even involves, I gather, having to pass a
test which most existing UK nationals would fail.

As for "and now owns property there", the fact that she is planning to
dispose of it would weaken the case, no?
 
R

RobertL

Alec said:
'Domicile' is completely different from 'residence' or 'ordinary
residence.' You could live in this country most of your life but still not
[be] domiciled here.
Yes, you could, but it would be exceptional.  A foreigner coming here
and marrying a Brit and settling down and having a family here would
certainly be deemed to be domiciled here.  The retention of foreign
domicile would imply there remained a wish in the person's mind at
some point to return to that country forever.  If there appears to be
a clear intention to remain here forever, usually because one's ties
to here are stronger than to where home used to be, then domcile is
here.
Those with a father born outside UK normally inherit his
non-UK domicile,
Yes, initially, at birth.
and it's quite difficult to change it.
Not at all.
In your wife's
case, I assume her father is Romanian born there, and the fact that she
retained her original nationality and now owns a property there makes ita
strong case that she is domiciled abroad.
I disagree.  Domicile is easier to change than nationality, in the sense
that domicile change just happens by itself, it does not happen as a result
of an administrative act, whereas nationality change involves jumping
through all sorts of hoops.  It even involves, I gather, having to pass a
test which most existing UK nationals would fail.

As for "and now owns property there", the fact that she is planning to
dispose of it would weaken the case, no?
Well, maybe not. She would sell it in order to buy another one closer
to where her parents live (in Romania). We did buy the flat
specifically because we thought we might one day go and live in
Romania so we wanted to keep a toe hold in the property market there.
But it is only a possibility, not a likely one. House prices there
are rising at about 40% per year.

However, i don't think we would want to press for non-dom status
especially given the upcoming fixed tax for non-doms.

Robert
 
Ad

Advertisements

T

tim.....

However, i don't think we would want to press for non-dom status
If you were born here, you have no chance at all of establishing 'non dom'
status whilst you are still living here, whatever the status of your wife.
especially given the upcoming fixed tax for non-doms.
So this would be a non issue (but it wouldn't anyway as you have
misunderstood the charge, but I wanted to make the point above.)

tim
 
R

RobertL

If you were born here, you have no chance at all of establishing 'non dom'
status whilst you are still living here, whatever the status of your wife.


So this would be a non issue (but it wouldn't anyway as you have
misunderstood the charge, but I wanted to make the point above.)

tim
Sorry, I meant to say i don't think _she_ would press for ND status.
i didn't imagine that i could get it, nor would want it.

Robert
 
J

Jonathan Bryce

RobertL said:
many thanks, that confirms my understanding, She is domiciled in the
UK.
Are you sure? If she is from Romania originally, and still owns an interest
in a house there, that would tend to suggest she is not domiciled in the
UK.
 
J

Jonathan Bryce

Ronald said:
Alec said:
'Domicile' is completely different from 'residence' or 'ordinary
residence.' You could live in this country most of your life but still
not
[be] domiciled here.
Yes, you could, but it would be exceptional. A foreigner coming here
and marrying a Brit and settling down and having a family here would
certainly be deemed to be domiciled here. The retention of foreign
domicile would imply there remained a wish in the person's mind at
some point to return to that country forever. If there appears to be
a clear intention to remain here forever, usually because one's ties
to here are stronger than to where home used to be, then domcile is
here.
If the husband dies, would she return to Romania? If the answer is yes, or
maybe, then she is still domiciled there.
 
R

Ronald Raygun

Jonathan said:
Ronald said:
Alec said:
'Domicile' is completely different from 'residence' or 'ordinary
residence.' You could live in this country most of your life but still
not
[be] domiciled here.
Yes, you could, but it would be exceptional. A foreigner coming here
and marrying a Brit and settling down and having a family here would
certainly be deemed to be domiciled here. The retention of foreign
domicile would imply there remained a wish in the person's mind at
some point to return to that country forever. If there appears to be
a clear intention to remain here forever, usually because one's ties
to here are stronger than to where home used to be, then domcile is
here.
If the husband dies, would she return to Romania? If the answer is yes,
or maybe, then she is still domiciled there.
Agreed. But if they have children here, who have started school, then
the answer is likely to be no, especially if they don't speak Romanian
at home.
 
Ad

Advertisements

R

RobertL

So this would be a non issue (but it wouldn't anyway as you have
misunderstood the charge, but I wanted to make the point above.)

tim
Tim, Is the summary non-dom charge (which I may have misunderstood)
as follows please?

If she is dom in UK she pays CGT on the romanian flat sale regardless
of whether she remits the money to the UK,
If she is not dom here she can choose
either :
to pay the new charge and pay tax only on income remitted to the UK
or:
to pay tax here as if she were dom here, therefore paying CGT on the
flat sale regarless of wherth the money is remitted back to the UK.

many thanks,

Robert
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top