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Original poster

just cannot believe our luck - soooo angry

33 replies

MrsMillsletoe · 13/12/2005 13:09

We are due to be emigrating to Sweden on 3rd January. DH's employer are providing us with accommodation for up to 18 months until we sell our home in England. Everything is ready, the contracts are signed, the packers and removers are booked, schools notified etc etc.

Yesterday DH had a meeting with a Swedish tax advisor who informs us that when we come to sell our home in England, we will be liable to pay 30% tax on the profit we make. This works out at about £45k! There is just no way we can afford to lose that much money, nor will we have enough for a deposit on a house in Stockholm. I am so angry, upset, devastated and lots of other words.

DH is holding emergency talks but it's not looking good.

Any suggestions gratefully received.

OP posts:

gggimmesnowsnow · 13/12/2005 13:14

What about renting your house out?

fuzzywuzzy · 13/12/2005 13:16

They're treating it as income in Sweden?? Can you not leave the monies in an account here and take it bit by bit to spend over there....??? Does that make sense??

Original poster

MrsMillsletoe · 13/12/2005 13:17

We've considered this but we need to sell it to have a big enough deposit for half decent house in Sweden.

OP posts:

SilentBite · 13/12/2005 13:20

Surely only on the net profit you make on the rental income while renting it out? Presumably you will continue to pay the mortgage?

Original poster

MrsMillsletoe · 13/12/2005 13:26

No, we definately have to pay on the profit from the house sale. Renting is not an option as we need a massive deposit, but we cannot afford to lose that much.

DH is currently in emergency talks to find an solution but i don't know how much more i can take.

OP posts:

walkinginawinterBundleland · 13/12/2005 13:27

SilentBite · 13/12/2005 13:28

How about renting in sweden and renting out house here to finance it?

gggimmesnowsnow · 13/12/2005 13:29

That's waht I thought sb (am going to stop stalking you now and go empty dishwasher)

Original poster

MrsMillsletoe · 13/12/2005 13:31

The rentals in Sweden are so expensive, we couldn't afford to do that. It's currently costing his employer about £1800 for an unfurnished house, and it doesn't even have a sauna!

Thanks for your suggestions though. I just wanted somehwere to rant as I have been sobbing for most of the day.

OP posts:

SilentBite · 13/12/2005 13:32

OK Have found this

It says that only half of the profit would be taxed at 30%, ("Half of the sum of a capital gain resulting from the sale of a private residence is taxable")and also, "It is also possible to defer payment of the tax if the seller in turn purchases an equivalent property or tenant-owner flat not later than the year following the year of sale" (not that that helps much as you still have to pay it)

I would try and get confirmation that this applies on properties abroad if you are not a Swedish citizen as sounds a bit odd to me.

"Generally speaking all income in this category is taxed at a rate of 30 percent regardless of the amount. Examples of income from capital are dividends, interest, capital gains arising from the sale of stocks, bonds, real estate, personal property and other similar assets plus income from the rental of flats or houses unless this is undertaken as a business activity.

Half of the sum of a capital gain resulting from the sale of a private residence is taxable. It is also possible to defer payment of the tax if the seller in turn purchases an equivalent property or tenant-owner flat not later than the year following the year of sale. If the sale concerns a property owned for business activity then 90 percent of the capital gain is liable to taxation. Income from the sale of other private assets is taxable if the profit exceeds SEK 50,000.

If a capital deficit results a tax reduction is granted. The tax reduction is 30 percent for that portion of the loss that is below SEK 100,000 and 21 percent for the balance."

CaRowlers · 13/12/2005 13:32

Did DH's employers know about this rule?
If so, they should have made this clear to him.
Maybe they can step in and help with the costs?
They should do if they want him.
I'd be amazed if there wasn't a way round it.
Do Dh's employer have a legal team?

Original poster

MrsMillsletoe · 13/12/2005 13:38

His employer weren't aware of this and are quite ambarrassed that this has come up so close to use moving. Apparantly, if they were to help witht the costs, they would have to pay 2.5 time the amount, which they are saying isn't an option for them. DH (who is in effing Capetown at the moment), has asked them to consider them buying out house before 3rd Jan.

The main problem is that we will become Swedish residents, which is why all these tax regulations will occur. We need to be residents to have bank accounts, get the children into school, have any utilities, buy a car etc. etc.

Silentbite, it is Ernst and Young who we are dealing with and they are adament it will apply to us.

OP posts:

ladymuck · 13/12/2005 13:49

Is your move permanent?

Can you defer your (not dh's) move until after you have completed the sale here in the UK? This would prevent you from being tax resident in Sweden at the point of the sale.

Sometimes these gains can be avoided if you keep the money offshore, but that is not feasible here by the sounds of it.

Blondeinlondon · 13/12/2005 13:50

Can't you become residents after the house sale goes through?

JennyWren · 13/12/2005 13:59

Can you put the house into your name only? Then your dh could move first, for his job, and you and your children could stay in the UK until your house sale has gone through. Then you can move and become resident, too. Alternatively, could you auction your house before January 3rd? Either would get you around the rules I would think.

Also, have you contacted a Swedish accountant about this, rather than a British accountant dealing in Swedish law? There may just be some loophole E&Y aren't aware of?

Original poster

MrsMillsletoe · 13/12/2005 14:02

We could stay here without DH but it could be months and months before the house is sold and one of the main reasons we would be moving is to spend more time together. I couldn't bear having him living in another country indefinately, nor could he.

If I knew the house would be sold in a month then we would consider this but I also know how long it has taken to find a house over there, arrange removals etc.. AARRGGHHH so frustrated!

OP posts:

SilentBite · 13/12/2005 14:02

So did E&Y tell you that you would only have to pay 30% on HALF the capital gain?

Original poster

MrsMillsletoe · 13/12/2005 14:03

Jennywren, it was a Swedish accountant he spoke to (un)fortunately.

I gave the window cleaner his marching orders yesterday too.

OP posts:

fruitful · 13/12/2005 14:05

Can you sell the house to your parents for 50p? What are the Swedish tax implications of family members giving you a large sum of money out the goodness of their hearts in a few months time?

browniechick · 13/12/2005 14:08

Would you still be coming back to the UK for any length of time once you had moved to Sweden? If so, you would still be "deemed domicile" in the UK - you then may be able to see if there was a double taxation agreement with Sweden, so you might be able to avoid the tax in Sweden, as it wouldn't ordinarily apply in the UK, as there is no Capital Gains Tax to pay on your main residence here...Just thought, perhaps worth looking in to?

Good Luck

Original poster

MrsMillsletoe · 13/12/2005 14:08

I think we would be done for tax evasion!

If we were staying in the UK, the profit would be taxed at 35%, but we also receive a full allowance as it is our home - resulting in no tax to be paid.
If our house was in Sweden, and we sold it, it would be taxed at 30%, but we also receive a full allowance as it is our home - resulting in no
tax to be paid
However, our house is in the UK, and our next house would be in Sweden, therefore it would be taxed at 30%, and no allowance would be applied - resulting in us having to pay massive tax. The technical issue is that we will be Swedish tax payers when we make the profit in the UK.

This is how it was explained to me. No mention of 50% though, still couldn't afford to lose that.

OP posts:

spruceylucy5 · 13/12/2005 14:08

I dont know about Sweden but here in Spain you can buy a house etc just by registering with the local police as a stranger. Lots of people are residents but on paper they are not. My dh is paid from UK and keeps that money in a uk account. In reality he is a resident as we live here fulltime but he hasnt got residency. It might be worth checking if there are any little loopholes, i recommend trying to find an expat site.

LIZS · 13/12/2005 14:10

Are you absolutely sure. That may be the case if he opts to buy totally into a Swedish scheme but double check with the tax office here as there is often a Double Taxation Treaty to avoid situations like this if you remain UK Domiciled, non Resident (think it is that way round !)for example. Presumably if the money remained in UK you would not be liable but sounds like you need it in Sweden. Could you rent out the house here instead of selling ?

We had to declare the capital value of our UK house while resident in Switzerland but don't think this amounted to much tax liability there in the end. However ours was always a temporary move and dh paid UK NI contributions not Swiss. We continued to pay UK tax on our income in UK (rent, interest etc).

JennyWren · 13/12/2005 14:10

Maybe the thing to do then is to look at auction, even if it is a little after January 3rd. That way, you would have a fixed date for the house sale, and you could look forward to a certain date when you can move. And although you may end up selling for a little under your ideal price, it would still be less than the loss you'll have if you have to pay the tax bill.

gggimmesnowsnow · 13/12/2005 14:14

The expat site thing is a damn good idea.

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