Capital Gains Tax Advice

silentmonkey

Hi

Anyone out there with Capital Gains Tax experience.

I Have a question.

If I Sell A Second house that was a Student Let and withing the same tax year use all of those funds to buy a Holiday Let will I need to pay Capital Gains tax this year or will it be deferred to when I come to sell the Holiday Let?

Thanks In advance

Mark

00ec25

1. the property you are selling does not qualify for business assets rollover relief as it is a student let and therefore does not meet the definition, the only form of property letting busienss which qualified for this was the sale of an exisiting furnished lettings business

2. rollover relief was removed for funished holiday lets in April 2010, rollover relief is not available on the sale of ANY property in the UK as from that date

answer therefore No, CGT will be due in current tax year of sale of student property

a few seconds on google would have found this

silentmonkey

Thanks for the swift reply 00ec25

I should have mentioned that this took place last year 2009/2010. I had seen the document that you mentioned but those changes come into force this April and my understanding of that was that FHL are now treated like any other letting business. i.e You can no longer offset losses against personal income tax and replacement of furnishings now falls under the 10% wear an tear rule.

Your item 1 confused me. Surely if I purchased a property and kitted it out as a furnished HMO it would be classed as a property letting business. Is that not the case?

00ec25

business asset rollover relief is only available where the asset being sold is part of a trading business, income from UK property letting (eg a student HMO or any other form of letting related income - except an exisiting furnished holiday letting or FHL business) is expressly excluded from the definition of a trading business, as the mere receipt of rent is not considered to be a trading activity, hence my item 1

what I mean is that sale of a non FHL UK property (in which you have not lived as your main residence) will be suject to CGT at the time of sale on a case by case basis, you cannot link the sale of one with any subsequent purchase of another unless you are eligibel for either a) business asset rollover relief or b) entrepreneurs relief. In your case neither of those apply

http://www.hmrc.gov.uk/cgt/property/reliefs.htm
http://www.hmrc.gov.uk/cgt/businesses/reliefs.htm

Until April 2010 rollover relief applied to sale of an existing furnished holiday letting, but in your case, the asset being sold is not an existing FHL, therefore you cannot rollover the disposal proceeds against the purchase cost of the new (FHL) asset. As you know FHL are treated the same as any other UK property income business after April 2010 so that relief no longer applies

silentmonkey

Thanks 00ec25 the lights have now come on. That clears it up nicely.