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PPR/CGT/Part-Disposal/Land

PPR/CGT/Part-Disposal/Land

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Scenario - Mr and Mrs A are selling their rental property.  Property has been owned for 15 years, was their PPR for 12 years and let for 3.

At some point in these 12 years of PPR the adjacent field (I believe around 3 acres) was purchased to change the nature of the home into an equestrian-based small holding.  Will this satisfy the use and enjoyment rules?  I'd like to think so but feel uneasy about it. 

The property has now been sold and if we were to take the land out of the equation completely the PPR and letting relief mitigates the CGT liability completely before using the annual exemption.  But, it has now transpired that only part of the land has been sold with the property, the rest they are keeping for themselves.

I'm not looking for calculations but can someone explain how this will affect the CGT calculations? Does the land have to be removed from the PPR calculations completely/do the part-disposal rules apply?

Thanks for any comments.

PS I am not submitting this return but I work with the Mr and he is asking advice! 

Replies (5)

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By Gem7321
21st Nov 2014 13:20

Just bumping

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Stepurhan
By stepurhan
21st Nov 2014 14:09

Tell him to see an accountant

Immediate thoughts.

The house did not originally have the 3 acres attached to it. It would therefore seem likely that the original garden was of sufficient size for reasonable enjoyment of the property. Also the land was specifically purchased with a business motive in mind (use as an equestrian smallholding). Both these indicate it has never been part of the PPR, so the land should be excluded from PPR calculations.

The devil is in the detail for such transactions though so face to face advice would be wise.

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By King_Maker
21st Nov 2014 14:27

Not much hope of PPR relief for the 3 acres, IMHO. There was a similar equestrian centre based case where the taxpayer lost (I cannot remember the name off-hand) and the court confirmed it was an objective not a subjective test.

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By Gem7321
24th Nov 2014 12:33

Thank you for your replies. 

Thank you for your replies. 

 

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By King_Maker
24th Nov 2014 13:49

The case which I had in mind was Longson v. Baker (2001).

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