SELLING UK PROPERTY AS AN ITALIAN RESIDENT

Selling UK property as an Italian resident.  It’s always good to review certain subjects again and I was recently talking to someone about selling rental / second home property in the UK and the potential tax consequences of doing so. If you have held the property for more than 5 years, from acquisition or inheritance (and excluding any emotional or sentimental attachment to the property for the purposes of this discussion) then the sale of a property could be a tax planning opportunity rather than a consequence.   If you are an Italian resident and sell a property in the UK, or any other country for that matter, then the first rule of law to be applied is that in the country in which the asset is located. Fixed assets must be taxed in the country where they are located first, then assessed for tax purposes in the country in which the owner is resident.   In the case of a UK property owner you would have to pay UK non-resident capital gains tax first. This was introduced in April 2015 so the purchase price for the purposes of calculating any gain in the property price would be the value of the market property on 6th April 2015. This would then be subtracted from the sale price to determine any capital gain, if any.  However, as a resident in Italy if you have purchased the property, or received the property, more than five tax years ago then the sale would be exempt from capital gains tax, in Italy.  If you sell it within the five-year rule, then capital gains tax would apply. If you are planning / thinking about selling a property overseas as an Italian resident, then it is always good to remember this tax break. The Italian theory is that once a property has been owned for more than five years it is no longer considered a speculative purchase and therefore the tax break applies.   Something to consider if you are thinking of making a permanent break from the UK post Brexit. (Brexit would not affect this, although tax authorities are free to change the rules at any time.)