Disposition of residential property

Disposition of residential property in the UK triggers Capital Gains Tax (CGT) liabilities. If you owned the property on or before April 5, 2015, the assessable gain is calculated from April 5, 2015, to the disposal date.

Private Residence Relief may apply if the property was your primary residence at any time, and the annual exemption can offset the gain. For properties owned on April 5, 2015, you have options:

1. Default position: Claim the property’s market value on April 5, 2015, against the sale proceeds. The gain or loss is the difference between the sale proceeds (minus costs) and the April 5, 2015, market value (plus any enhancements thereafter). If the property was your primary residence before April 5, 2015, you can claim the last 9 months.

2. Time apportionment: Elect to apportion the gain over the total ownership period, with the chargeable portion relating to after April 5, 2015.

3. Retrospective basis: Elect for the whole gain or loss to be considered. This might be chosen if there’s a loss or if private residence relief results in a lower gain over the entire period. Once made, the elections in options 2 and 3 are irrevocable.

For non-residential property sold after April 5, 2019, such as commercial buildings, land, or shares in a company with significant UK land or building assets, the same principles apply. You have the choice between:

1. Default position: Claim the property’s market value on April 5, 2019, against the sale proceeds.

2. Retrospective basis: Opt for the entire gain or loss to be accounted for. This may be preferable if there’s a loss that couldn’t be claimed on the disposal of shares in a company.

In all cases, if you’re non-resident for less than five full tax years, any capital gains made on assets other than dwellings sold after April 5, 2015, or other immovable property sold after April 5, 2019, may be taxable in the year of your return unless those assets were acquired and disposed of while you were non-resident.

Besides dwellings sold after April 5, 2015, or other immovable property sold after April 5, 2019, or assets used in a UK trade, if you return to the UK after five tax years, there’s no Capital Gains Tax liability as a non-resident.

You must report the disposition of land and buildings and pay the tax within 60 days of completing the sale, regardless of whether you file a self-assessment return. Confirm your tax reporting obligations in your country of residence with a local tax advisor.