No Capital Gains Tax, No Inheritance Tax - how does this work

[dave99]

I've been told many times that there will be No Capital gains tax or Inheritance Tax to pay on property in Egypt, but I've not been able to find any Tax laws to back this up.

Is there an Account or Lawyer that knows which laws govern this and why the Tax laws in the UK do not apply.

 

[Muzz]

I understood that the laws of the country you reside in apply

 

[dave99]

Hi Muzz

That's what I've been told before but I'm hoping that one of the Legal experts on the forum might offer something more specific, and reference the appropraite Egyptian laws.

 

[queenie40something]

I have asked Zeiad to have a look at this thread and maybe he can spread some light on the subject.

 

[Mark .Y.]

They are both payable for UK residents

I've been told many times that there will be No Capital gains tax or Inheritance Tax to pay on property in Egypt, but I've not been able to find any Tax laws to back this up.

Is there an Account or Lawyer that knows which laws govern this and why the Tax laws in the UK do not apply.

This is incorrect Nigel and many agents know this, they just prefer not to mention it. They fall back on phrases such as "it is all down to the individual's personal situation" which of course it is - but thats exactly as it is in the UK.

Whilst there may be no CGT or Inheritance Tax payable in Egypt itself, for a domiciled UK resident the usual rules apply. So, if you make a Capital Gain when you sell your apartment in Egypt and that takes you over the allowance (approx £9K pa) then CGT is due and HMRC will expect you to report the gain.
The good news is, if husbands and wives/partners buy the apartment in joint names then you have two lots of annual allowances.
There also used to be indexation/taper relief to help offset the gain but I think all the CGT rules have changed recently and am not up to date.

IHT is also payable on your worldwide assets (assuming you go over the tax-free band (about £280K I think at the moment).

Mark .Y.

 

[queenie40something]

Hi Mark - thanks for the information - certainly sounds like you know your stuff. As alot of people are nearing completion these are the sort of things that they need to start considering.
By the way hows the apartment hunting coming along??

Thanks again
Alison

 

[Mark .Y.]

Hi Mark - thanks for the information - certainly sounds like you know your stuff. As alot of people are nearing completion these are the sort of things that they need to start considering.
By the way hows the apartment hunting coming along??

Thanks again
Alison

Hi Alison,

We have put everything on hold at the moment. I am carefully watching the prices in the US and the £/$ exchange rate as I feel if things continue the way they have been going for, say, another 8-12 months the US will offer the best value for money around.
If we get to $2 to the pound clear and the prices continue to fall a decent 3 bed 2 bath apartment on a complex in Florida will be available for around £35-40,000. Flights, although longer, are usually available around the same price as Egypt.
Having said that, I am still watching the Egyptian market !!

Mark .Y.

 

[queenie40something]

Hi Mark - good luck with wherever you choose and keep us updated.

 

[jackd1000]

This is incorrect Nigel and many agents know this, they just prefer not to mention it. They fall back on phrases such as "it is all down to the individual's personal situation" which of course it is - but thats exactly as it is in the UK.

Whilst there may be no CGT or Inheritance Tax payable in Egypt itself, for a domiciled UK resident the usual rules apply. So, if you make a Capital Gain when you sell your apartment in Egypt and that takes you over the allowance (approx £9K pa) then CGT is due and HMRC will expect you to report the gain.
The good news is, if husbands and wives/partners buy the apartment in joint names then you have two lots of annual allowances.
There also used to be indexation/taper relief to help offset the gain but I think all the CGT rules have changed recently and am not up to date.

IHT is also payable on your worldwide assets (assuming you go over the tax-free band (about £280K I think at the moment).

Mark .Y.

Mark

Apologies if this is a bit of an old thread of a question !

How does that relationship fit in with the Double Taxation treaty between England and Egypt ? If tax is paid on CGT in Egypt then it need not be paid here as its a double payment is it not ?

Jack

 

[Mark .Y.]

Mark

Apologies if this is a bit of an old thread of a question !

How does that relationship fit in with the Double Taxation treaty between England and Egypt ? If tax is paid on CGT in Egypt then it need not be paid here as its a double payment is it not ?

Jack

Hallo Jack,

Blimey, haven't posted on here for ages - good job they send you an email to say somebody has added to the thread.

OK, I don't know what agreement the UK has with Egypt or what the rates are but the way these tax treaties work is that you report the Capital Gain via your UK tax return. If there is a charge of ,say, £4000 you are allowed to deduct anything you have paid in Egypt.
So, if the CGT charge is lower in Egypt because their rates are different and you have paid the equivalent of £2000 to the Egyptian tax authorities then your bill to HMRC would only be £2000.
If there is no CGT liability in Egypt then your bill would still be £4000 to HMRC hence my slight annoyance at these agents making a fuss of the fact that there is no CGT in Egypt.
I am certainly no expert but that is the way I understand it and I hope it helps.

Regards,
Mark .Y.

 

[Odd-bod]

Mark is Correct

The way properties are advertised is misleading. I found it amusing that they advertise no CGT or IT but while in egypt there maybe no CGT & no IT - there is in the country you live in ie the UK and ANY income is taxable beyond alowances (minus expenses) AND inheritance tax will be applied if you are deemed to be a citizen of the UK ie it is a part of your estate.

Audrey

 

[Kalou1972]

Oh my God!....That is so crafty !! We are in the process of buying our first foreign property. Its mainly an investment but holiday home as well. One of the attractions was no CGT "" ...So basically it only applies if you are a resident ??

 

[Odd-bod]

Remember- 'capital gains' you have to gain capital over your yearly allowance & you can offset some expenses. Highly unlikely this will apply to one holiday home- its not the rent they are after - thats income.
Audrey

 

[Kalou1972]

Yes I understand that....around 9k each I believe? But I assume rental should also be declared as an income and taxable if still a resident in the UK?? ....or not ??.....I apologise by the way.....extremely new to this !!

 

[Odd-bod]

Yes you OUGHT to be declaring the income, but there are allowances for that too & i am sure some dodges.

Audrey