Selling Property Abroad and Bringing Money to UK
Published on July 05, 2023
Updated on December 04, 2024
by Clark Stott
Clark Stott has been with Expat Tax Online since 2015. Being a dual national based in the UK, Clark has unique experience helping US citizens (and Accidental Americans) become tax compliant via the Streamlined Tax Amnesty program. Clark likes to help Americans in the UK keep their tax situations as simple as possible to avoid harsh IRS treatment.
Table of Contents
Do I need to pay taxes in the UK if I sell a property abroad?
Yes, when you sell a property, whether domestically or abroad, you must report the sale to His Majesty’s Revenue and Customs (HMRC) and pay any tax due within 30 days of the sale.
It is also essential to consider several points aside from taxation, particularly those related to the potential for currency exchange fluctuations and money transfer regulations.
What are the tax implications of selling property abroad?
Like the Brits, US expats will be subject to numerous tax implications. The country where the property is nestled may also ask for its share of taxes. Here are some of the key points to consider:
Capital Gains Tax (CGT)
Similar to selling a property in the UK, the seller is obligated to pay CGT on the profit made of £3,000 and above when selling property abroad, and the CGT amount depends on the seller’s income tax band.
It’s important to note that not all assets are subject to CGT. Various reliefs can eliminate or reduce tax liability.
Foreign Tax Liability
The country where the property is located may also impose taxes on the sale of real estate. In some jurisdictions, these taxes vary widely, including transaction taxes, local or national gains taxes, and property sales taxes.
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It’s for American citizens that didn’t know they had to file US tax returns each year, and have therefore fallen behind. Some more than 30 years! With the IRS Streamlined Procedure, say goodbye to overdue tax returns, late fees, and penalties.
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How can I calculate capital gains tax on property sales abroad?
The CGT is based on the gain you make when selling the property, not the total amount you receive. The gain is typically the selling price minus the original purchase price and associated costs such as legal fees, stamp duty, and improvement costs.
The rate for the CGT amount that you pay is dependent on your income tax band.
CGT tax rate for the year 2024-2025:
Type of Property |
Basic-Rate |
Higher and Additional-Rate |
Residential Property |
18% |
24% |
Commercial Property |
10% |
20% |
How do I avoid double taxation on the sale of my property?
The UK has Double Taxation Agreements (DTAs) with many countries to ensure that individuals do not pay tax twice on the same income. If the country where your property is located has a DTA with the UK, you can offset the foreign tax against your UK tax liability.
Can I apply for the principal private residence relief upon selling my property?
If the property you’re selling has been your primary residence, you may qualify for PPR relief, which could significantly reduce your CGT. However, this relief doesn’t apply to property abroad.
Do I need to report the proceeds from selling my property abroad?
It is a fundamental obligation for US expats living as UK residents to report the income they earn within the UK and their global income, including the proceeds from selling property overseas.
UK residents must report foreign income or gains of £2,000 or more or any money they bring to the UK from abroad. If you sell property abroad and make a gain, you must disclose this on a self-assessment tax return. Even if the gain is less than the reporting threshold or you have no tax to pay, you may still need to report it.
How can foreign currency affect my capital gains calculation?
The exchange rate at the time of the property sale is used when calculating any potential capital gains. When calculating capital gains for tax purposes, HMRC requires that all amounts and allowable expenses be converted into GBP at the exchange rate on the relevant date.
You should also consider how to transfer the proceeds back to the UK. You can choose whether to convert and transfer the funds immediately or wait for a more favorable exchange rate.
It’s important to note that the fluctuation in currency rates from when you bought the property to when you sold it could impact your capital gains calculation, potentially resulting in either a gain or loss.
How can my mortgage payment affect the proceeds from selling my property abroad?
US expats must settle any foreign mortgage or loan on the property from the sale proceeds. This will affect the net amount and leave you with the outstanding mortgage balance to which you repatriate to the UK.
If you sell your property for US$300,000 and have a US$100,000 mortgage balance, the mortgage should be deducted from the sale proceeds, leaving you with US$200,000 before any additional costs or taxes.
It’s worth noting that terms, conditions, interest rates, and lending criteria can significantly vary by country and institution, making it essential to conduct thorough research and, if possible, seek professional financial advice.
What documents should I prepare when bringing my money back to the UK?
The documents can vary based on the country where the property is located, but there are some common elements:
- Property’s title deed: It should include detailed information about the property and its boundaries and attests to its clear title.
- Sale contract or agreement: This typically includes information about the buyer and the seller, the property, the agreed-upon price, and the payment schedule. It also lays out any conditions that must be met before the sale can be finalized.
- Documentation of the property’s condition: Such as a home inspection report or a statement of structural soundness.
- Up-to-date payment of property taxes and utility bills: This confirms that no outstanding debts are tied to the property that the buyer might inherit.
To prove the legality of the sale, you may also require a lawyer or notary to confirm the validity of the documents and oversee the transaction. Their endorsement can help ensure that all legal requirements have been met and that the sale is legally binding.
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