Tax on selling a UK property

Finance, Taxes, Banking, Insurance and Retirement
1
We have a small flat back in Scotland that we rent out. The tenant who was there for about 4 years has recently moved out and as we've been renting it for a few years now it's at the stage where it's starting to need a refurb (it was last decorated 7 years ago).I handle everything via a letting agent and some of the quotes they've got from contractors are a bit ridiculous. For instance, one wanted 4.5k just for basic redecoration and a new stair carpet (when I was back in Scotland Feb 2020 I was quoted £850 for redecorating the 2 bed / 2 bathroom semi I have there). I had a new roof put on in 2019, the cost was shared 50/50 between us and the shop underneath.

I've decided it might be better for us to just sell it now, but I need to know if there are any tax implications in Switzerland. I had it valued recently and would get about 60 - 65k for it under the "offers over" system in Scotland.

I did search the threads last night but could only find a short one dating back to 2013, so I assume the info might be out of date by now. If anyone could point me in the right direction I'd be really grateful

2
Maybe change letting agent as of 18.00hrs........TODAY !!

3
Have you been submitting a swiss tax return? If so you should have been declaring the property value, rent, expenses and mortgage in your swiss tax return. These values would be used to determine your tax rates for income tax and wealth tax

The principle applied in CH is that property is taxed where it is located, but the value and net rent impact the tax rate applied to your swiss based income and wealth

4
I can confirm both the properties we have are declared in Switzerland, the one we rent out has no mortgage and we submit all paperwork relating to the rental income, agency fees, maintenance etc.

5
I understand that on selling the property at a higher amount than paid, you may have to pay capital gains tax.

However, if you reinvest the cash in property, you dont.

https://www.ch.ch/en/property-gains-tax/

Tho, I'd spend the chf250 to ask an expert, if i were you;

http://www.colfina.ch/english/aboutus/index.html

6
We paid 41k for it about 15 years ago. 1 bed flats don't accumulate much where it is (even though it's in a village that gets used for filming Outlander lol) and the idea at the time was to liquidate it on retirement, but of course at that point we had no idea we'd be moving to Switzerland for a few years (also my pension has gone bust and FSCS have told me I've no entitlement to compensation).

I've asked my OH to query it with the firm who do our tax returns. Realistically, I'm fed up dealing with it because even though it's fully managed there is only so much the agents are legally allowed to do. Also the last tenant often didn't bother to report issues and they'd be flagged up on the inspection report.

There was also a lot of silly things I paid call out charges for like he'd report the heating wasn't working and the contractor would tell him he just needed to turn up the thermostats on the radiators. At one point he was trying to say there were rats in between the walls and he was notorious for going out when contractors made arrangements with him to attend.

Unbelievable the guy was a physics teacher with a masters degree in engineering. He also signed the tenancy agreement for another 12 months and gave notice 2 weeks later so that's just cost me 120 quid.

Letting out property isn't all it's cracked up to be, apologies for being a bit ranty

7
don't let the tail wag the dog. if you want to sell it, sell it. and pay whatever you need to pay.

i wish i had sold when i thought about it instead of talking myself out of it. in the intervening period, the GBP dropped (pre-brexit) and the opportunity cost of that money re-invested would have been huge.

8
CGT is payable in the UK if it's above the annual exemption of £12,300 (20/21 tax year)

9
But does CGT apply in Britain if you're no longer UK taxpayers? We haven't been for a few years and we officially closed our company 3 years ago. We're also exempt as we're registered as overseas landlords, the agent sends us both an annual certificate for this.

10
Re CGT in the UK - I did a quick calculation on HMRC's website and it came up with zero. It was calculated on the basis of the property having a complete refurb after we bought it (kitchen, bathroom, central heating, windows etc) and it being joint ownership.

What was also taken into consideration was the value about 5 or 6 years ago (the accountant we had for our Scottish business used to provide us with an annual figure as she also did our tax returns for us) and the fact we lived in it for a few months in 2014 whilst we were house hunting (OH moved to Basel to do a 6 month contract in Dec 2014, 3 months after we bought our house).

11
You must do an annual UK tax declaration for any UK property regardless of your Swiss tax status. This was the instruction given to me by HMRC when I moved to Switzerland.

Being recognised as an "overseas landlord" does not negate this requirement but simply means that UK tax is not deducted at source by the estate agent.

Given your likely rental income (based on your quoted exepected sale price), coupled with joint-ownership, you will almost certainly end up with a zero tax assessment but it still needs to be submitted and assessed.

The linked article from Which? covers a lot on the topic of CGT. https://www.which.co.uk/money/tax/ca...y-avuq96u1500f

The comment made in post #5 (referencing www.ch.ch ) is misleading as this only applies to Swiss properties.

ALL OF THESE COMMENTS ARE "TO THE BEST OF MY KNOWLEDGE, BASED ON MY OWN DIRECT EXPERIENCE" AND ARE NO SUBSTITUTE FOR PROFESSIONAL ADVICE OR OFFICIAL INSTRUCTIONS.

12
Assuming the rules are the same in Scotland as in England, the below link is quite handy. It explains the latest regulations.

https://www.expertsforexpats.com/exp...ritish-expats/

As I understand it, basically CGT is applied on second homes (homes where you are not the primary resident). If your property didn't appreciate in value significantly, the impact should be minimum. The good news is that CGT is not applicable for other investments assuming you don't return to the UK within 5 years.

13
This thread hasnt mentioned the fact that the sale of property by non-residents is covered by special provisions for calculation of the gain and there is also a transaction reporting requirement.

https://www.gov.uk/tax-live-abroad-sell-uk-home

Until 2015 the sale was exempt from CGT, the rules basically provide your gain can be apportioned over the full period of ownership or calculated relative to the value on 6/4/2015 so that the tax is not retrospective. If there is a gain you may be able to claim reliefs for some or all of the period of ownership.