Justindorville Posted October 16, 2005 Posted October 16, 2005 Hi lads, anyone help me out here, I can't wait till Monday to ask an accountant! I am very seriously looking into purchasing a ski apartent in Bulgaria as an investment. It all seems like a great idea untill the time comes to sell it and get hold of my big lump sum of dosh (hopefully). I know when I sell the place I am subject to 19.5% 'corporation tax' in Bulgaria......... Ouch! However if I keep hold of the property for 5 years or mnore then I won't pay anything out at all. The issue I am trying to resolve is when I get the money back into good old Blighty will I then have to pay 40% Capital gains tax on what money I have left over after Bulgaria has had its share. I know you do get a tax free allowance of £8000 over here but you have to admit, If I have to pay tax out of my profit in both countries the amount I end up with is hardly worth the hassle of buying the place in the first place! Anyone have any experience with this or similar? Surely I can't get stung in both countries!!?? :confused: Cheers, Justin Quote
Guest Neil Morris Posted October 16, 2005 Posted October 16, 2005 IOM. Bank account......just an idea.......!! Quote
Guest astrassuck Posted October 16, 2005 Posted October 16, 2005 40% :shock: I hate this theiving ******* country :(:(:(:(:( Quote
RichardS Posted October 16, 2005 Posted October 16, 2005 You only pay CGT on the profit from the sale (above the £8k allowance) not the full sale proceeds so if you don't sell for loads more than you paid it doesn't matter. You can also off-set the solicitors and agents costs against the gain to reduce it. You also get taper relief, reducing the gain to account for regular inflation etc but on non-business assets it isn't as much. IIRC as soon as the money enters the UK it is subject to UK tax laws and the CGT is at your highest rate - I assume you are on 40% here anyway. However you can claim the foreign tax credit against whatever tax you pay here up to the the equivalent tax rate in the UK. As the 19.5% you pay in Bulgaria is below the 40% here, you can treat that as tax already paid on the gain. Just complete the "foreign" section of a tax return. It's been over a year since I quit as a tax manager at an accountants so I may have forgotten something....... .....Where's Shrimpo when you need him ;) Richard :D Quote I have something to say............ It's better to burn out than to fade away..... :tt2:
Justindorville Posted October 16, 2005 Author Posted October 16, 2005 Cheers for that Richard. :bow: I have spoken to my mate whos an accountant and she says that you do get double taxation relief which means our wonderful goverment will only sting me for 20.5% as I would already have paid 19.5% in Bulgaria but ultmately I will still be paying 40%! :headvswal I did not think about solicitors fees etc thought, thats a good point. Don't suppose you would know if its only gains made on the core price of the property that is taxable? Say for example I bought a place for £40000, I would then have additional expenses such as VAT, Stamp duty, Solicitors fees (as mentioned), Agency fees and about £2000 to furnish the apartment. I wonder if all this could be offset when working out the gain? I know one thing, the way this country is going I am tempted to just move into the apartment in Bulgaria and leave all this crap behind! Quote
RichardS Posted October 16, 2005 Posted October 16, 2005 Cheers for that Richard. :bow: ............Don't suppose you would know if its only gains made on the core price of the property that is taxable? Say for example I bought a place for £40000, I would then have additional expenses such as VAT, Stamp duty, Solicitors fees (as mentioned), Agency fees and about £2000 to furnish the apartment. I wonder if all this could be offset when working out the gain?.................! In a word yes! all the VAT, related local taxes (not rates though) and stamp duty get added to the purchase price, as would the cost of any improvements/building works. The legal & agency fees + VAT (both on purchase and sale) can be deducted as allowable costs from the future gain, thus reducing the taxable profit. Furnishing costs are really a deductible expense from any rental income, should you rent it out during your ownership, along with local rates mortgage interest etc. Richard :smw: Quote I have something to say............ It's better to burn out than to fade away..... :tt2:
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