What to do after commercial property sale?

vincent.lee

Hi.

Earlier this year, I bought a commercial property for £40,000.

After some financial issues, I've had to sell it for a loss, at £35,000.

I did opt-in to tax for the property, so I'll have to pay the HMRC the VAT owed on the final VAT return.

I've informed HMRC, de-registered for VAT, and will pay the final VAT refund and process the final VAT/Tax return in early December by the due date.

Is there anything else I need to do? As I understand, I won't pay any capital gains tax or income tax, as I sold it for a loss.

Will I still have to fill in the final self-assessment or log anything else?

00ec25

who is "I"?
- limited company?
- sole trader?

vincent.lee

00ec25 wrote: »

who is "I"?
- limited company?
- sole trader?

Sole Trader

00ec25

so as sole trader you are presumably already required to do a tax return.

a) was the sole trader actively trading during the tax year? If yes, then obviously you need to do a tax return anyway. On that basis you are required to declare any CGT transactions, even if there is no tax to pay.

b) If on the other hand the sole trader ended last tax year, and you informed HMRC of that fact and they confirmed in writing that "you" are no longer required to do a tax return then the sale of the commercial property in the following tax year does not have to be reported because the gross proceeds of the sale are less than 4x the 19/20 tax year annual exempt amount for CGT (4 x 12,000)

I rather suspect that para a) applies since the sole trader effectively ends with the sale of its premises - so do a tax return with CGT pages included.

Cook_County

You'd want to argue that this was a trading venture, so you get income tax relief for the loss. How brave do you feel?

tebthereb

More info needed on reason for purchase and intentions when acquiring the property, before it can be established whether it’s an income or capital receipt. Also useful to know; what is your sole trader business?

vincent.lee

Cook_County wrote: »

You'd want to argue that this was a trading venture, so you get income tax relief for the loss. How brave do you feel?

Surely that wouldn't work.

I bought the property in January 2019 and tried to rent it out, which failed. My father then became very ill, and I needed money to support him, so I sold the shop at the loss mentioned.

The fact that I tried to rent it out, and failed, and had the property for months would surely make it capital gains?

Is that right?

vincent.lee

tebthereb wrote: »

More info needed on reason for purchase and intentions when acquiring the property, before it can be established whether it’s an income or capital receipt. Also useful to know; what is your sole trader business?

My sole trader business was going to be a landlord for the commercial property - I bought it with the intention of letting it out.

I bought it with the intention of renting it out. Would the purchase and sale of this not be capital gains?