I have a property in Poland, which was bought in 2015 for £48,000. It was lived in as my primary residence for four years and then I moved to the UK in November 2019. I am now UK resident. The current value of the property is £93,000, and the outstanding mortgage is £38,000. I'm unsure how to calculate roughly how much tax I will have to pay when I sell this house now.  

Arthur Weller replies:  

If you sell the property now for £93,000, you will have made a capital gain of £45,000. Over eight years of ownership, you have made a capital gain of £5,625 per year. The first four years are exempt because you lived in the property as your main residence, and the last nine months of ownership are also exempt due to the final period exemption. So, you have relief of (4.75 x £5,625) = £26,719. Therefore, your taxable gain is £45,000 – £26,719 = £18,281. You can deduct from this the capital gains tax annual exemption, which (for 2023/24) is £6,000. So, you need to pay UK capital gains tax (CGT) on £12,281. Please note that I have not included in the computation (but which should have been included) any costs of purchase and sale. Also, there may be the equivalent of capital gains tax (CGT) in Poland to pay, and you should look at the double tax agreement between UK and Poland to see whether this could reduce your UK capital gains tax liability (you are not affected by the rules explained in HMRC’s Capital Gains Manual at www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64420p; see page 64575 onwards).