Can a client reinvest profits made on the sale of two houses (rented not lived in) and keep the annual allowance for himself eg profited 20000, reinvest 12000 keep 8000 of allowance?
Kim Robinson
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EIS deferral Relief
Gains on ANY assets can be deferred via reinvestment in an EIS qualifying company. If you fancy a punt on an EIS investment it would be worthwhile investigating further.
What is known as...
... rollover or re-investment relief is not available for gains made on disposals of investment properties because letting property is not regarded as a trade (unless it is Furnished Holiday Letting).
This means that, if you sell for a chargeable gain (after taper relief) of £20,000, you pay tax on £12,000 after deducting the annual allowance of £8,000 (actually £8,200 for 2004/05). There is no tax effect if the £12,000 is re-invested in a new property.
The chargeable gain is calculated as the actual gain less indexation. If relevant, non-business taper relief is then applied before the annual allowance.