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.
- experian and credit agencies 64 1
- Homing sandwiches 507 13
- Limited company to community interest company 35 1
- How can I deal with an unethical accountant? 358 10
- How do I undo the work of a Macro in Excel 203 5
- Error in audited accounts 193 3
- CIS software 117 3
- Pratice Management Software 194 3
- Use of home query 149 2
- IT advisory questions? 274 7
- signature required 574 22
- Vat registration exception 208 3
- CT600 150 3
- Director appointment not valid - any observations? 212 7
- Settlement discount 177 4
- Director Personal Bank Account in company's books 526 9
- A number of Clearbooks VAT return issues! 182 2
- VAT on hotel payments received in advance 151 2
- Norwegian p45, which UK Tax return does it go into 239 10
- Left UK in 2006 but did not declare rental income since 2009 148 1
- Auto enrolment excuses 1,259
- Feedback on accounts production software for IFRS 826
- Add T&Cs to Sales Order in Sage 528
- Digita Hosted Software 344
- Credit where credit's due....... 319
- Buying goods in US and selling them to company in US 246
- Flat rate VAT- other income calculation 204
- TheTax Donut 188
- Double taxation relief - same income, different individual 167
- Corporation Tax return - more than one trade 166