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Post by bheywood on Jul 20, 2005 9:52:19 GMT 1
Or to be more precise - if you have bought privately because you didn't have the extra readies at the time to go the company route, is it possible to avoid paying the dreaded CGT in any other way apart from waiting 3 years after you receive your offical permission documents?
For instance: if once the papers come back I now had the money to set up a "company", would it be theoretically possible to do so and then sell the property to the company for the original price paid - and therefore pay no CGT - and therafter sell the property on through the company without paying CGT on the profit?
I'm aware that there would be the usual 5% taxes to and lawyer fees to pay, but these could be much less than the CGT due if the property greatly increased in value.
I'm not seriously thinking of doing this, but am curious if such a loop-hole does exist...!
Anyone have any opinion?
Ben
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Post by Karl on Jul 26, 2005 21:15:32 GMT 1
Yes
As I understand it, you could sell your property to your newly formed company - for the original price paid - and therefore avoid paying CGT.
BUT - The Croatian tax officials may take a dim view of it and value the property at a higher value than you have sold it for and therefore you become liable for the tax.
AND - you will pay 20% Profit tax if and when you sell the property and you will have yearly accountants fees to pay. You would then take the profit as a dividend (tax Free), BUT you may be liable for tax in your home country - Double taxation etc, best speak to a good accountant before making any changes.
Regards
Karl
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Post by alsdoubles on Jul 26, 2005 22:41:53 GMT 1
Don't do it.
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Post by Culchie on Jul 28, 2005 10:24:57 GMT 1
Ben, to be honest, I think this falls into the realms of Tax Evasion rather than Tax Avoidance.
You don't really want to go down that route, as it will bite you in the ass at a later stage.
If it were that easy and legal wouldn't everyone be doing it, it's not a complex idea.
Pay your CGT and sleep easy. It's payable on profit only, and index linked.
BTW, is it 3 years from when you receive your papers, or 3 years from contract or completion date that the 3 years CGT rule kicks in?
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Post by bheywood on Jul 28, 2005 14:22:30 GMT 1
Just a hypothetical, Culchie - it just occured to me t'other night that it might be feasible and I thought I'd ask, as tax evasion is not illegal - tax fraud is.
You have to wait 3 years after the permissions comes through.
However, sounds like too much bother for too little ££ gain. Guess we'll just have to enjoy the house for a few years more before thinking of selling it! Ben
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Post by mark2 on Jul 28, 2005 15:31:33 GMT 1
I don't know about Croatia but tax evasion is a crime in the UK and people are prosecuted and sent to prison for it, but typically only in very serious cases where they have deliberately concealed matters or lied under investigation; in 1999 - 2000 there were only 55 Inland Revenue prosecutions. Many others “confess” to their local tax office and reached a settlement with the Inspector there, or in large cases reach a settlement with the Revenue’s Special Compliance Office using the so-called Hansard procedure. This name reflects the fact that, for many years, the Revenue has operated a policy, explained by successive Chancellors of the Exchequer in Parliament and published in Hansard, whereby while not offering an immunity from prosecution for tax evasion, they will where appropriate conclude a financial settlement in return for a “full confession”.
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Post by EMIZZZZAGREB on Jul 28, 2005 16:17:07 GMT 1
Foreigners coming in to buy property which they then sell on at a profit a couple of years later, should be stopped, its even worse when they want to avoid cgt.
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Post by Culchie on Jul 28, 2005 17:10:57 GMT 1
Well I guess that is why the 35% (3 year rule) is there, to do exactly just that, prevent foreign speculation.
Seems like it is effective as well.
BTW Ben, even after 3 years is up, if you are UK tax resident (living there 180 days or more), you will still have to pay CGT to British tax Authorities (It's 20% here in Ireland, I dunno what it is in UK)
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Post by mark2 on Jul 28, 2005 17:26:53 GMT 1
40% in UK
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Post by Culchie on Jul 28, 2005 18:16:21 GMT 1
Ouch
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Post by bheywood on Aug 3, 2005 9:10:15 GMT 1
Apparently you do not have to pay UK CGT if the money is re-invested in Croatia - which would be our plan.
Still, thanks for your replies - interesting to get your opinions.
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Post by Culchie on Aug 3, 2005 9:57:29 GMT 1
Is that an absolute definite ? Not doubting you, just asking question for my own information. If you sold an investment property in UK, you would liable to pay CGT before re-investing (I think), so I just wonder is it the same.
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Post by mambo on Aug 25, 2005 21:47:28 GMT 1
There is a legal way to avoid of all this, it will cost a bit of money, but whether it is profitable depends on the amount of profit that you hope to make. It has nothing to do with tax evasion, it has everything to do with avoiding double taxation in a legal way.
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