cALCULATING cgt ON MONEY FOR GRANTING AN EASEMENT

Computersaysno

Sorry about the capslock!!


How do we calculate the Capital Gains Tax on money received for granting an easement??


Property was bought for £400k two years ago.


Selling the easement will bring in £30K.


The easement applies to about 1% of the entire property area.


How do we calculate the sum applicable for CGT??

Tom99

[FONT=Verdana, sans-serif]I assume this is not your main residence?[/FONT]
[FONT=Verdana, sans-serif]Not absolutely sure but I think you would treat is as a part disposal so you would need to calculate the value of what remains. Say that is now £425K.[/FONT]
[FONT=Verdana, sans-serif]So the %age you have disposed of will be:[/FONT]
[FONT=Verdana, sans-serif]30/(30+425)= 6.6%[/FONT]
[FONT=Verdana, sans-serif]Use 6.6% of your original acquisition costs to deduct from the net disposal costs.[/FONT]

Computersaysno

No it's definitely main residence.


Bought for £400k


Now worth say £420


Easement brings in £40


40/(40+420) = 8.7%


8.7% of original purchase cost [8.7% of £400]= £33.8


So net capital gain is only £40 -£33.8 = £6.2k




Or am I doing it wrong??

Tom99

Computersaysno wrote: »

No it's definitely main residence.

Should be tax free then:

https://www.taxation.co.uk/Articles/2012/05/16/39411/drive-they-said

Pennywise

Tom99 wrote: »

Should be tax free then:

https://www.taxation.co.uk/Articles/2012/05/16/39411/drive-they-said

Probably yes, but worth checking the exact facts/detail of the situation. There are occasions where it may be deemed as not be part of the "main residence" depending upon size, layout, etc. Eg, if the land is separated from the main residence, i.e. across a road or is fenced off as a separate field etc., but, yes, normally, if it's within the curtailage and forms part of a "normal" residence, then yes, probably exempt under main residence exemption.