CGT on residential units created out of a PPR.

Capital gains on units created out of a Principal Private residence

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One of my personal tax clients created two completely self contained flats (with their own entrances) out of his freehold house approximately 3 years ago. He is now living in the much smaller house with one flat rented out commercially to a 3rd party and the other occupied rent free by his son. Now he wants to sell the rented out flat to a willing buyer and gift the other flat to his son. What are the CGT implications please ? I assume that my client will be liable to CGT on the uplift from the date of the creation of the 2 flats to dates of disposal/gift. Is this correct ?  No legal documents have yet been drawn up for the separate 2 flats. There is still one title deed for the freehold property (original building) at Land Registry. Does this make any difference to the CGT position?

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By Accountant A
12th Jan 2017 00:05

Have a look at this (ignoring my "contribution"):

https://www.accountingweb.co.uk/any-answers/capital-gains-tax-on-ppr-wit...

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By Atmptax
12th Jan 2017 00:58

"Where a taxpayer owns a large property which is divided into several self-contained units, only those parts that the taxpayer actually occupies qualify for exemption."

According to this CGT will apply because relief is available. Before selling the flat, your client should occupy the flat in order to take advantage of last 18 months deemed occupation.

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Replying to Atmptax:
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By Portia Nina Levin
12th Jan 2017 11:08

This is complete b*llocks!

I cannot find where Apmtax has taken their quote from, but it in the context of a property that has been converted into flats, CG65265 has this to say:

"A measure of relief will be due on each flat which formed part of the owner’s residence when the property was a single undivided dwelling house. Similarly a measure of relief under Section 223(4) may be due on any such flat which has been let before sale."

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Replying to Portia Nina Levin:
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By Atmptax
12th Jan 2017 15:00

I quoted this from Kaplan ACCA P6 FA2015 page 257 "The meaning of dwelling house". Have a look at it.

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Replying to Atmptax:
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By Portia Nina Levin
12th Jan 2017 15:27

ROFL. So you are a student quoting a study manual completely out of context. Do you think that is helpful?

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Replying to Portia Nina Levin:
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By Atmptax
12th Jan 2017 21:06

Where do you think they get study material from? Lol.
You got your info from HMRC manuals whereas I got from a book. Both are the same thing, you are saying what i'm saying.

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Replying to Atmptax:
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By Portia Nina Levin
12th Jan 2017 21:48

No. I am saying something very different to what you are saying.

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