Guest House Tax

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Can anyone help? I have a potential client who is selling a guest house that is soley a guest house, not lived in by the seller.

If this is sold, what are the current CGT implications, can the seller claim entrepreneurs relief on the entire sale including the building?

Any help greatly appreciated.

Replies (7)

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By frankfx
27th Feb 2021 18:49

Point us to your research please.

ER ?

BADR

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By frankfx
27th Feb 2021 18:49

Point us to your research please.

ER ?

BADR

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By lucas123
27th Feb 2021 20:14

Yes sorry BADR as it is now known, most information relates to Guest houses lived in by the owners but this never has.

https://entrepreneurhandbook.co.uk/entrepreneurs-relief/

Can you claim entrepreneurs’ relief on property?

As we know, entrepreneurs’ relief reduces the payable Capital Gains tax on profits. If the property is your main place of residence and you have lived there throughout your ownership of the property, then it will be exempt from CGT, so claiming entrepreneurs’ relief won’t apply. CGT is applicable, however, for other residential property.

Whether entrepreneurs’ relief is applicable on commercial property is dependent on several factors. Firstly, has the company received any rent on the property in question? If the answer is yes, this property won’t be eligible for entrepreneurs’ relief, as the property will be considered an investment.

If not – great! The property is classed a business asset, and therefore might be eligible for entrepreneurs’ relief. The second factor to consider, then, is whether the sale of the property is associated with the sale of the whole or part of the business that the property is used in. If it is, then you can claim entrepreneurs’ relief on the sale of the property.

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Replying to lucas123:
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By Tax Dragon
01st Mar 2021 06:47

So, based on those three paragraphs of research, have you any thoughts? (It helps respondents to explain, not just to tell, if OPs provide some of their thinking. IMHO, responses that explain are far more useful. And far more checkable - if you're simply told something, how do you know if it's right or wrong? If it's explained, you can review the explanation.)

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By lucas123
27th Feb 2021 20:15

Yes sorry BADR as it is now known, most information relates to Guest houses lived in by the owners but this never has.

https://entrepreneurhandbook.co.uk/entrepreneurs-relief/

Can you claim entrepreneurs’ relief on property?

As we know, entrepreneurs’ relief reduces the payable Capital Gains tax on profits. If the property is your main place of residence and you have lived there throughout your ownership of the property, then it will be exempt from CGT, so claiming entrepreneurs’ relief won’t apply. CGT is applicable, however, for other residential property.

Whether entrepreneurs’ relief is applicable on commercial property is dependent on several factors. Firstly, has the company received any rent on the property in question? If the answer is yes, this property won’t be eligible for entrepreneurs’ relief, as the property will be considered an investment.

If not – great! The property is classed a business asset, and therefore might be eligible for entrepreneurs’ relief. The second factor to consider, then, is whether the sale of the property is associated with the sale of the whole or part of the business that the property is used in. If it is, then you can claim entrepreneurs’ relief on the sale of the property.

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Scooby
By gainsborough
28th Feb 2021 10:42

Think more information is needed - is this guest house run similar to a B&B, or does it meet the Furnished Holiday Let tests?

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By lucas123
28th Feb 2021 18:52

Yes, it is ran like a B&B

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