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Straightforward roll over ?

Close investment company selling a cafe to buy a flat

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I may be over thinking this. Close investment company is selling the property that they previousl traded from. The sole Director wishes to invest the proceeds in a flat. That flat may at some point be rented by a relative and others. We aren't sure yet of the proceeds but could roll-over relief be claimed if there is a gain? It seems to hinge on whether or not the rental income would be considered as trading income? Am I correct in assuming it wouldn't be possible as it won't be a FHL? It's been a long day, what am I missing?

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Psycho
By Wilson Philips
04th Sep 2019 20:27

I don’t think you’re missing much - it would need to be let as FHL from day 1 for there to be any chance of relief.

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By Tax Dragon
05th Sep 2019 06:51

Even if let as furnished holiday accommodation from day 1, you have an issue with the "old" asset.

It's worth reading s152 itself (rather than just guidance). There is provision for apportioning gains (it's either s152(7) or Sch 7, I forget which without looking), but my recollection (please don't rely on it) is that the old asset must be in trading use when sold.

Having read the section, do look at decent commentary too.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
05th Sep 2019 10:30

A 3-year gap between trades is considered to be acceptable - SP8/81

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Sparkly Orange
By Sparkly
05th Sep 2019 12:58

Would it make any difference if the proceeds were invested in a commercial premises and rented out rather than a domestic property? i.e. are there any other circumstances other than FHL where the rental would be considered a trade? Struggling to find a definitive answer

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Replying to Sparkly:
Psycho
By Wilson Philips
05th Sep 2019 14:15

As far as I know, FHL is the only case where rental profits can be treated as trade profits.

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