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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have sold a flat for £425000, afterdeducting original cost,cost

Resolved Question:

I have sold a flat for £425000, afterdeducting original cost,cost of sale and improvements since original inheritance the gain looks like £371775, I have never lived in this flat - although it was used as an office for about 2 years.
Can I claim any additional reliefs ?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

Can you tell me who used it as an office for two years, what business you ran, how long ago you ceased to use it as an office, how long you owned it and whether it was let please.

Customer: replied 2 years ago.

t was used as an office for a rental property business, both by myself and a part time secretary. I owned the flat from 1985, it was used as an office fro 85 to 1989

Customer: replied 2 years ago.

t was used as an office for a rental property business, both by myself and a part time secretary. I owned the flat from 1985, it was used as an office fro 85 to 1989


Expert:  TonyTax replied 2 years ago.

Thanks.

I'm afraid that, unless the flat was let as a furnished holiday let, there aren't any reliefs you can claim since the property was not occupied by you as your main home. There may have been the possibility of a claim to some entrepreneurs' relief (See HS275 here) since you might at a stretch have been able to argue that the flat was a business asset but that opportunity has gone I'm afraid as even if the business is still in existence, it hasn't been used in it for many years.

Your gain will be calculated by taking the sum of the value of the flat when you inherited it, the improvement costs and the costs of selling it (legal fees, selling agent fees etc) and deducting that from the disposal proceeds. The first £11,000 of gains made in a tax year are exempt from CGT.

There are two rates of Capital Gains Tax, 18% and 28%. The rate or combination of rates that you will pay will depend on the level of your income in the tax year you disposed of the flat. Assuming the flat was sold in the current tax year, one of the following scenarios will apply:

1 If the sum of your income and the taxable gain is £41,865 or less, then all the gain will be taxable at 18%.

2 If your income alone is more than £41,865, then all the gain will be taxable at 28%.

3 If your income alone is £41,865 or less but that figure is exceeded when you add the taxable gain, then part of the gain will be taxed at 18% and part at 28%.

I hope this helps but let me know if you have any further questions.

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