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Yes the property was sold as a whole without splitting business/residential areas. The business ceased when we sold/retired there was no payment for goodwill etc.
Access to the residential area was only possible through the restaurant. We paid domestic rates on the residential part.
I have detailed my computations in a separate note to be sent with each of our tax returns pointing out that the proceeds of the sale of the commercial property are one third of the total sale price and showing the allowable costs I have applied to reach our net capital gain in each case. My wife was operating as the restaurateur and she has a trading loss to put against her gain.
I have only applied one third of the original purchase price to my calculation, is that correct?, the property was purchased as a whole and the existing business had closed down at that time.
I see your point. I read their guidance on Entrepreneurs Relief and deduced that since I was a direct co-owner of the business premises which were sold I was eligible to claim relief on my part of the capital gain on the sale proceeds is that not the case?
Also as I mentioned I have only applied one third of the original purchase price to my calculation of gain, is that correct?, the property was purchased as a whole and the existing business had closed down at that time, (this could make a significant difference to my personal liability if I cannot claim relief!)
Ok, thank you that seems clear, if rather bad news though.
As I mentioned already, I have only applied one third of the original purchase price in my calculation of gain, is that correct?, the property was also purchased as a whole with no distinction between areas, no payment was made for the business or goodwill as it had closed down at that time, (this could make a significant difference to my personal liability if I cannot claim relief!)
I said in previous posts that the split of the gain based on floor space is fine especially since the property is effectively one unit as access to the residence is through the restaurant. If the residence could be sold separately from the business premises, then you would probably need to have the residence and the business premises valued separately.Whilst you will not qualify for entrepreneurs' relief on that part of your share of the gain allocated to the business premises, you will qualify for main residence relief for that part of the your share of the gain allocated to the residence. Your wife will qualify for ER and main residence relief.
Yes Thank you very much, I understand that part clearly now, but I think you may have mis-read my last query:
When working out the allowable costs to apply against the gain I only used one third of the original purchase price of the whole property (ie £30,000) (purchased as one property for £90,000, the business having been closed down some time previously) should I use the full purchase price to put against our gain?