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bigduckontax, Accountant
Category: Tax
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I've got two investment properties being compulsory purchased,

Customer Question

I've got two investment properties being compulsory purchased, If I invest the capital gain from the two investment property within a year into another investment property will I have to pay capital gains tax?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Here is the Gov UK guidance of this matter (Roll Over Relief): 'To qualify for Business Asset Rollover Relief:you must buy the new assets within 3 years of selling or disposing of the old ones (or up to one year before)your business must be trading when you sell the old assets and buy the new onesyou must use the old and new assets in your businessYou can claim relief on assets including:land and buildingsfixed plant or machinery, eg a printing press'You see you have a bit longer than you thought! You do not actually avoid Capital Gains Tax (CGT), you merely postpone it to some future, indeterminate date. I do hope that I have been able to set your mind at rest on this matter.
Customer: replied 2 years ago.
I bought these properties in my own name, they are not owned by a business, does your answer apply to the same situation?
Expert:  bigduckontax replied 2 years ago.
If they are used for business purposes as you infer from your question then I am of the opinion that the relief does apply. If, however, they are not used for business the usual CGT rules will operate and the compulsory purchase will be classed as a disposal and any gain subject to taxation at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal. You have an Annual Exempt Amount (AEA) of 11.1K to offset these gains and if the properties were let and you lived in them before or after letting then Lettings Relief (LR) up to 40K might be available also.