Help sought on CGT future disposal please. Or opinions. Client owned farm and land in the sixties (after 1965). Including cottage.
Farm was farmed (by H&W) until it's sale in 1995. Cottage retained.Cottage was occupied by farm worker until the 1980s, then rented out as residential rent thereafter.
About 10 years ago the cottage was converted into the splendid house it now is worth over £1m. Looking at CGT and downsizing, planning etc.
Two thoughts on CGT - 1) compare £1m to the MV82 plus the costs of building 10 years ago. PPR for last 10 years etc etc or 2) well it's a new asset? The old asset - on which it was wholly business or wholly not PPR - has disappeared? Therefore look at the deemed gain that it was in 10 years ago, before the old asset became the new house, and tax the gain that would have arisen then? No PPR and tax at 28%.
option 2 might seem a bit of a made up tax rule?? Or am I just thinking it's unfair to tax numbers for selling the PPR (new asset) when much of the time period relates to an old asset that simply disappeared?