Capital Gain Calculation for Second Home
I think I know the answer to this one but I'm not certain, it relates to PPR and transfer of land.
Client owned House A and his mother lived at House B which was adjacent. Client's mother died some years ago and he inherited House B (which was later transferred into 50/50 owenship with client's wife). Various improvements to House B were made, it was rented out for some years and then sold last year for a profit, which even after taking into account improvements, the split ownership and the capital gains allowance will still amount in some capital gains tax, the client never lived in House B so if wouldn't attract any PPR relief. After acquiring House B but before selling it the client moved from House A to House C some distance away, at the time House A would have attracted full PPR relief and no CGT paid.
So far so good - however two of the improvements to House B involved the acquisition of land, one was bought from a neighbour, client has the records and I am including the value of the land as an improvement in the calculation. The complication is that some land was transferred from the deeds of House A (the clients old private residence) to House B, the value at the time would only have been a few thousand (based on the value of the other similar land acquired at arms length around the same time).
The client had initially wanted to include this land under the improvements - but clearly this is not right as there was no cost to acquiring the land - it was freely transferred. My question is would any PPR attach to this small section of land, which at one point had been part of the Client's PPR? TCGA 1992 s222 refers to disposing of an interest in:
"(b)land which he has for his own occupation and enjoyment with that residence as its garden or grounds up to the permitted area"
This criteria appears to be met and had this land been disposed of with House A it would have qualified fully for PPR relief, when the land was transferred to the deed of the second property it still remained under the ownership of the client, although it ceased to be part of the principal residence at that point.
Any advice welcomed.
- VAT by Direct Debit 54 6
- Tax refunds for 2014/15 626 9
- The new married allowance 56 1
- Er... 270 2
- Getting fees, getting harder? 1,660 30
- Career advice for ex HMRC Inspector 823 19
- Accountex flash mob 512 17
- Cash extraction pre-sale 191 5
- VAT claim on exempt supply 304 11
- Group structure - transfer of shares 121 5
- Child benefit 329 9
- £3750 earned in Dubai - where on the income tax return??? 104 3
- Tax on selling a sole trader business 303 10
- IR 35 214 5
- Share disposal - help please 100 1
- New desktop accounting and payroll, help, please 341 11
- Final accounts - procedure 340 6
- NIC question 112 1
- sole trader to ltd company 272 3
- Moneysoft Payroll Manager Connection Problem 163 2
- Services via intermediaries and new HMRC reporting requirements 655
- LIVE: Budget aftermath webinar 410
- Pensions Regulator 380
- RTI - duplicate employee record 342
- NIC contribution on unremitted income 328
- SA penalty proposals 307
- Using the correct forms 302
- How hard is it to reduce a code? 297
- Sage Vat return box 2 205
- Digital marketing focus group 202