John Monaghan
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CGT on Flat sale

CGT on Flat sale

Client purchased a property in June 1986 for 41K and occupied it until June 1991.
During that time he had a number of lodgers.
In July 1991 he vacated the property and moved into rented accommodation where he remains.
From July 1991 - June 1992 the property was let.
From July 1992 - March 1994 the property was not let.
April 1994 to date the property has been let and has been substantially restructured consisting of three self contained flats.

If he disposes of the property ( ie all three flats)for 200K, for what period can he claim PPR?
Does the asset qualify as a business asset for taper relief?
If so, from when and at what rate?
What is his likely CGT liability?
John Monaghan


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By admin
15th Oct 2001 19:00

Straight forward mathematics.
The client's initial occupation as his main residence of the entire property for at leasr some of the period notwithstanding the lodgers is assumed.
His total period of ownership is 15.5 years.
Of this period . Of this 5+3 =8years qualifies under TCGA s.223(1).. He can also claim further relief under s.223(4).
The last three years of ownership which already qualify as PPR cannot also be used to compute the s.223(4) relief .The remaining approx 5.5 years when it was let should give a full £40,000 deduction. Further relief will be available for the conversion costs and indexation relief. Non business taper relief at 5% will also be available. Without information on the dates and costs of the conversion the actual gain cannot be calculated

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By admin
15th Oct 2001 19:39

Section 224(3)
This section might apply to deny PPR for any part of the gain that relates to the splitting into 3 flats.

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