For the past couple of years, a lot of expats have asked me for help on how to dispose of their houses under private renting here in the UK.
Most of these expats left the country for jobs abroad and had every intention to return once their contract expires, so what they do is turn their homes into private renting proeprties until they return.
However, as they get accustomed and comfortable with the new country they’re living in, they decide to extend their stay and finally let go of their house in here.
Many expats, like my clients, ask the help of investors or estate agents to take care of finding a suitable buyer and the physical handover of the property to rent, but those with a large rolodex of family and friends left in the UK do the transaction themselves through the assitance of these contacts.
The selling part is easy, especially when there is high demand for property. What makes the process hard for some is the part when the taxman comes knocking at the door. After the change of tax rules on March 1998, some expats have been surprised by shocking tax charges when they thought that there should be none.
Fun fact! Did you know that non-resident UK citizens are exempt from capital gains tax from the sale of a property, but they have to meet certain requirements in order for the exemption to take place.
So who qualifies as non-resident UK citizens?
Basically these are UK citizens who return to the country or visit for less than 90 days are considered non-resident citizens.
Aside from that, the seller must make sure that his period of non residence must be for a period of at least 5 years. If you have been a non resident for less than 5 years, then the profit you earned from sale of your property would have to be charged a capital gains tax.
If you left the UK for another country before 17 March 1998, lady luck is on your side! This periodic rule on exemption doesn’t apply to you! All that is required is that you were a non resident at the time the sale was made.
Don’t forget that non-resident UK citizens who stayed abroad for less than 5 years may apply for a relief on their tax charge if they were to retain the property they own and dispose of it after reacquiring their resident status.
This relief I’m talking about is commonly called the PPR RELIEF aka the principal private residence relief. The PPR is computed by multiplying how long the seller acutally occupied in the property sold as his principal residence, and divided by his period of ownership.
There is also called a Lettings Relief where sellers are given an exemption from capital gains tax for that part of the gain attributable to the private renting rolling contract in so far as it does not exceed the lower of the tax free part of the gain under the PPR relief and £40,000.