2016/17 CGT on property.

2016/17 CGT on property.

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If a client has a mixed use property, one floor being a shop and one floor a flat, both of which he rents out and sells in 2016/17, I assume he will have to have the shop and flat valued separately due to the difference rates of capital gains tax applicable to residential property and other assets.What will happen if the flat was converted from an area previously used as part of the shop premises.

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paddle steamer
By DJKL
27th Sep 2016 14:40

http://www.legislation.gov.uk/ukpga/2016/24/schedule/12/enacted

PART 2
RPI disposals not involving relevant high value disposals
Application of Part
3
(1)
This Part of this Schedule applies where a person (“P”) makes an RPI disposal of (or of part of) an interest in land.
(2)
But this Part of this Schedule does not apply if the disposal is—
(a)
a relevant high value disposal, or
(b)
a disposal in which a relevant high value disposal is comprised.
(3)
In this Part of this Schedule “the disposed of interest” means—
(a)
the interest in land, or
(b)
if the disposal is of part of that interest, the part disposed of.

Computation of residential property gains and losses
4
(1)
The residential property gain or loss accruing on the disposal is computed as follows.
Step 1
Determine the amount of the gain or loss that accrues to P.
Step 2
The residential property gain or loss accruing on the disposal is an amount equal to the relevant fraction of that gain or loss (but see Step 3).
Step 3
If there has been mixed use of the subject matter of the disposed of interest on one or more days in the relevant ownership period, the residential property gain or loss accruing on the disposal is equal to the appropriate fraction of the amount given by Step 2.
(2)
In Step 2 “the relevant fraction” means—

where—
“RD” is the number of days in the relevant ownership period on which the subject matter of the disposed of interest consists wholly or partly of a dwelling;
“TD” is the total number of days in the relevant ownership period.
(3)
For the purposes of Step 3 there is “mixed use” of land on any day on which the land consists partly, but not exclusively, of one or more dwellings.
(4)
In Step 3 “the appropriate fraction” means the fraction that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings.
(5)
In this paragraph the “relevant ownership period” means the period—
(a)
beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982, and
(b)
ending with the day before the day on which the disposal occurs.

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Replying to DJKL:
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By brian-scholar
27th Sep 2016 16:03

Thank you very much, DJKL.

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Replying to brian-scholar:
paddle steamer
By DJKL
27th Sep 2016 16:35

I ought to have said, above from schedule 12 but hopefully you found it from the index to the Act.

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