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bigduckontax
bigduckontax, Accountant
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We have lived in our only property years. of

Resolved Question:

we have lived in our only property for 26 years. For 16 of those years approx. 30% of the property was used as a tea shop for 6 months of each year. For the last 10 years the property has just been a private residence. What are the likely capital gains implications if we decide to sell
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to ba bale to help you with your question. Here is the guidance from HMRC in PIM125200: 'If a building includes a shop with a wholly separate flat above it is treated as two separate buildings. The flat is a residential property and the shop is a commercial one. A flat is wholly separate if it has a separate entrance and has no inter-connection with other parts (for this purpose a communal hallway is not an inter-connection).' So my first question is does the flat comply with the description?
Customer: replied 1 year ago.
It is not a flat, The tea shop was in our 'sitting room' i.e the downstairs of our house. Its the same building just part of it was used for business
Expert:  bigduckontax replied 1 year ago.
That makes it much easier. PIM125200 goes on: 'If a building comprises part which is used for commercial purposes, such as a shop, with an inter-connected residential area, such as a flat, this is one building and the whole will be treated as residential as it is suitable for use as a dwelling. Different parts of a building are inter-connected if they share a common entrance and where you can move from one part to another without moving through common areas.' From the tenor of your reply to my initial query then this definition would appear to apply. Accordingly, although you are liable to Capital Gains Tax (CGT) on any gain made on sale, Private Residence Relief (PRR), which is at 100% of any gain, will apply; ie no CGT. PRR is routinely given automatically. I do hope that i have been able to set your mind at rest on this matter.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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