Valuation of rented property for CGT

Valuation of rented property for CGT

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A client holds several shops with flats above them, using one of the shops for his own trade.

I would like to know if anyone has successfully argued that the flats have no value as a separate identity as
this could be useful in mitigating CGT.

My reasoning is that the flats are likely to be unmortgagable as a separate entity due to "flying-freehold" aspects. In a recent valuation carried out the estate agent would only value the shop and flat as a whole for this reason.

As business asset taper relief applies to commercially let property (from 06/04/04 and already to that one used for the owners trade),over time the whole portfolio could be subject to business asset taper relief
if the flats have no value.

Would anyone care to share their experiences in this area?

Mark

Replies (3)

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By User deleted
19th Oct 2004 18:54

Majority of value in ground floor?
I would have though it possible to argue that the majority of the value in is in the gound floor on the basis that the marginal cost of adding the top floor is relatively small?

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By barryhallam
19th Oct 2004 13:39

Could the flat be a business asset?
Say the building was let to a chain of newsagents and the company (unlisted) let the manager of the shop live in the flat as part of remuneration and also for security reasons. Could it be argued that the whole building is a business asset?

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By AnonymousUser
19th Oct 2004 10:04

Does your client want to sell?
In agreement with the first respondent, I do not believe the flats have no value, even if no-one would offer a mortgage. If the flats are indeed of no value whatsoever, I will be more than happy to offer your client 10 quid for the lot. If he doesn't want to sell at that price, why not?

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