Capital gains tax if I sell part of a commercial property?

carrieondancing

Hello helpful people,

I've put this in the 'cutting tax' category for want of the right category to put it in - really I just want to know how this works.

If I sell part of my commercial property (eg 50%), do I have to pay capital gains tax at that point, or do I pay CGT when I eventually sell the other half in the future?  I can't seem to find this scenario online at all.

These are not actual figures, but supposing the cost of purchase and improvements etc was £200k, and I'm selling half for £150k, then I'm guessing that either:
a) If I sell half, then I halve the original purchase price (£100k), and pay CGT on the gain on that (£50k), or
b) I wait until I sell the second half in the future (eg for a further £160k), and at that point work the gain on the whole lot (£150k+£160k - original costs of £200k = £110k)

I'd appreciate answers from people with proper knowledge of this rather than guess work please - thank you :-)

Pennywise

Your (a) is the correct answer.  But it's too simplistic just to use "half" - you'd need a professionally valued "split" of the original purchase into the component parts, which I'm sure your current surveyor/estate agent could do by working backwards, as presumably you've had an up to date professional valuation to put the half you're selling on the market.

carrieondancing

Thanks so much for your quick reply! 

It's all just in theory so far, but I'm considering buying a proportion of the building with my pension fund.  So I wouldn't actually be selling off a section to another party.  It would be myself and my pension fund jointly owning it. Yes I realise it would have to be valued and then the correct proportions determined. 

With that in mind, your answer is really helpful - thank you.  Just at this point wanting to know whether I pay the part CGT now, which you have said I do  :-)

With this in mind I guess it's actually saving me some CGT as I can use my allowance when I sell this part, and then use my allowance again when I eventually sell the other part later.

Jeremy535897

Sometimes it is not practical to apportion the cost, so the method in https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12731 is used.