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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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.
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.
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