Capital Gains Tax on a Split Title

Teeks91

Hello!

I have a niche query regarding capital gains tax on a basement that I am in the process of selling. I purchased my flat for £95,000 in 2017, which included the title for the property combined with a title for the basement below.

For some context, the basement is not habitable at the moment, so is only used as storage for my junk from my flat

I have since split the title deeds so they are separate as I was interested in developing the basement, however this has not happened as it would cost too much to bring it to a livable standard. 

I have since accepted offers on my flat for £219,995 and had a separate offer of £39,995 for the basement . I am unsure if capital gains tax is required on the sale of the basement as I purchased it as one with the flat, as well as it being used as an ancillary to the flat.

I appreciate that this is quite a complicated issue, any advice or guidance would be greatly appreciated. Thank you!

Jeremy535897

The question is whether you use the basement as part of your main residence, or whether you split the title with a view to making a profit on its disposal. Whilst not on all fours with your situation, this example gives insight into the likely issues:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65271
You will also need to look at section 224(3) TCGA 1992.

Teeks91

Interesting! Thank you very much. 

I use the basement as an ancillary to my flat at the moment, as storage/ gym etc. But since they will be sold separate, the intention would be for a profit now.

My one concern is how i actually get a valuation of my basement for it to reflect within the amount i would have to pay in CGT.

Thanks again for your reply, much appreciated