Capital Allowances

Capital Allowances

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Individual has a commercial property consisting of a downstairs shop plus an upstairs flat (which has never been let out and I think used for storage)

The property was, many years ago run as a shop by themselves and husband.   

The shop now is only let out.

The property is to be sold.  Selling price around £280, purchase price (1984 ish around £10k)

Property was purchased in joint names with her and husband.  He died around£1990.   He ran the shop.  She wound it down and let it out after this as it was a repair shop and she could not repair.

Obviously acquisition cost is 1/2 of purchase price plus 1/2 of probate value.

Apart from rolling it over into a new asset, which is not desirable, I am not sure about what planning she could do.  Ignore IHT aspect which I can deal with.

She has 4 adult children, so I suppose she could gift them 1/5th prior to sale to use their AEs.  She was going to gift the funds anyway.  But not sure whether the costs of doing this would exceed any benefit.

I was also wondering about CAs.

I know a purchaser of commercial property can isolate this expenditure and claim CAs.

However, can, or is their any benefit of the vendor doing this?

CAs have never been claimed. 

Clearly a specialist valuer would be required to isolate the proportion of he sale price which relates to this, but am not sure whether it is possible, or of any benefit to do this.

I am wondering whether to pass on this one and refer it to someone else who can think of a creative way to get rid of the gain.

Replies (5)

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By User deleted
12th Jun 2014 09:59

Capital allowances

The question is - could  the vendor have claimed allowances? If the answer is yes, then I as purchaser would be insisting on the vendor identifying eligible expenditure or reducing the price.

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By LyneT
12th Jun 2014 11:20

Yes, the vendor could have claimed CAs.

The purchaser has made no request for price reduction or allocation.

Is there any benefit for the vendor to make an allocation?  I think not.  But am I wrong?

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By User deleted
12th Jun 2014 11:28

Given the amounts involved

Probably not worth making any allocation (and probably why the purchaser isn't making too much of a fuss - I didn't fully read the question and missed the point about original purchase price being only £10k). I suppose you might want to consider whether there has been subsequent expenditure on fixtures.

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By LyneT
12th Jun 2014 19:35

So presumably, no room for planning except transfer part now to family members.

No point in allocation for fixtures?

 

 

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By Paul D Utherone
13th Jun 2014 09:25

Transferring to family members

will be at Market Value, so crystallises a gain in the owners hands at presumably what she is expecting to sell the property for and therefore achieves nothing.

The family members will acquire @ MV and sell shortly thereafter for pretty much the same price.

Likely net saving = square root of BA

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