Capital gain on selling of apartment outside EU

Hi!

Since you are living in Sweden you are unlimited taxable in Sweden. This means that all incomes are taxable in Sweden regardless of where the incomes come from. You would need to use the exchange rate for 2013 when you calculate the acquisition price and the exchange rate for 2020 when you calculate the selling price. It doesn´t matter if you bring the money to Sweden or not.

Kind regards

Daniel

Thanks, Daniel for the quick response, I hope we can deduct the cost of renovation that we spend on a house before selling it even if we have not built something new in the house but renovate it completely like Kitchen, toilet, etc.

Hi Simon,

It is possible to deduct the cost for renovating if it was done during the last five year period before you sold the house, in your case during 2014 to 2019, and if the house is in better condition when you sell compared when you bought it.

Kind regards

Daniel

Hi Daniel, 

what proof/document I need to furnish to show payment towards renovation, Is the invoice for the payment made to the builder/renovation company is enough?

And is there anything else that can be deducted to lower the payable tax. 

however, I am in capital loss already as per the Indian calculation of capital gain/loss (as in India we have different calculations based on the inflation in the market). moreover, I have to pay SEK currency fluctuation as well which is making things worst for me. I will be in huge loss after paying taxes in Sweden which is more than 50% of the price difference from buying and selling + capital loss as per the market inflation.

Unfortunately the Swedish IRS, SKV, do not care how capital gains are calculated in other countries - only if tax has been paid which then is deductibale from Swedish tax. Regarding invoices - they should do. Note, however, and which something I do not think Daniel will tell you - I doubt India reports sales to Sweden and SKV. However, it is possible that they report bank accounts according to CRS. Regarding it is worth just ignoring SKV is an assessment only you can do.Do the Indian authorities know that you are living in Sweden - if not nothing will be reported to SE. If you want to be 100 percent safe, you need to fill in a K6 form in Sweden and pay taxes there which will be 22 percent on gains - with 5 year improvement costs deductible from gains calculated as sales price less acquisition price. The Swedes dont give a shit about inflation. There are pages at SKVs homepage that takes you through how to tax for such in SE. Otherwise I am sure Daniel can assist you. it is not very complicated.

Thanks Matgus3 for the detailed explanation, just out of my curiosity I want to know what are the consequences or penality if someone misses to report this due to lack of knowledge or being new to Swedish tax law.

How much fine one has to pay if Skatteverket finds out later on? I know there are many guys out there who don't know these minute details (I was one of them few days back until I started looking for information), to be honest many guys I know don't bother about it at all, they don't consider these things while submitting the declaration.

As the tax is 22 percent, they can charge 1.57 times this or ca 33 percent instead of the stated 22. Further penalties are unlikely. They will also charge a small interest which currently is close to 0 per annum.

And the 22 and 33 percent is on the gain, calculated as selling price, less commissions; less improvemt costs, less purchase or building cost. So only on the capital gain, not the selling price.

Personally I doubt India will report anything. But I am not sure. And if neither the Indian IRS or your Indian bank knows that you are a resident of Sweden, they will not report to Sweden either. This applies to both your sale and your bank account. But if you want to do it Swedish style, it is filling in the form K6 and pay the 22 to percent capital gains tax , less any Indian taxes you might have paid, including transaction taxes.

Personally I doubt India will report anything. But I am not sure. And if neither the Indian IRS or your Indian bank knows that you are a resident of Sweden, they will not report to Sweden either. This applies to both your sale and your bank account. But if you want to do it Swedish style, it is filling in the form K6 and pay the 22 to percent capital gains tax , less any Indian taxes you might have paid, including transaction taxes.

It should also be noted that the 5 year rule regarding improvements applies to white goods and such, including n minor renovations. Renovations or improvements that are of permanent nature, should be added to your purchase cost. Also note that any costs you have had, such as brokers, lawyers, stamp duties etc are deductible. If you have all the material, I am sure eg Daniel could put together a K6 in less that 1 hour. Also note, that as years go by, the likelihood that SKV will take interest decreases. And as said before, I am not sure anything will be reported.But if you ask Daniel what do do, I am sure he will tell you to fill in the K6 - because he must as a lawyer.

Also note that SKV can only go 5 years back in time. After that it is null and void.

Thanks Matgus3 for all your responses, I really appreciate your time and efforts in answering my queries. I am truly grateful to you guys @Daniel & @matgus3.