The property that has been let out by us has been there since about 1895.
We did not "build" the chapel, we "converted" it into a dwelling. It has been valued at £575,000 - £6000,000. The house that has been let out has been valued at £725,000 - £750,000.
The houses are registered with Land Registry as one heredisement,
The cost of the plot when we bought it in1998 was £198,000. The cost of the conversion will take a week to sort out. I have loads of receipts for work carried out and materials so hopefully can do this.
Thank you. Paragraph 3 applies. So, part of the taxable gain will be taxed at 18% and part will be taxed at 28%.. Can I assume that the two "Parts" are the parts of land and their houses?
We have read through the Private Residence Relief 2015/16 Paper and we have full relief from paying capital gains tax on the converted house that we live in and its land. Back to your scenario 3 and my question. Am I to understand that we would pay just the 28% of the selling price of the house that we have let out for the last sixteen years.
You say that you are covered by scenario 3 so you will pay CGT at 18% on some of the net taxable gain and at 28% on the balance of the net taxable gain. You can never pay more than 28% unless the rate of CGT is increased by the government.
You pay CGT on the net taxable gain (not the proceeds) which is calculated by taking the disposal proceeds and deducting from them the sum of the purchase price (part of the £198,000), legal fees, stamp duty, survey fees, selling agent fees, search fees and other disbursements. You then deduct £11,100 which is the annual CGT exemption for 2015/16 to arrive at your net taxable gain.