Reduced CGT in mixed BTL and Commercial property?

by Readers Question

13:53 PM, 16th May 2016
About 3 years ago

Reduced CGT in mixed BTL and Commercial property?

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Reduced CGT in mixed BTL and Commercial property?

Capital Gains Tax Reduced – from 28% to 20% for higher rate tax payers and from 18% to 10% for low rate tax payers from April 2016. However there will be an 8% surcharge on residential property leaving Landlords selling at the same old rate!Tax Solution

My wife and I own a single title building where the top two floors are BTL and the ground floor is let Commercially – a cafe and two storage units, to three different tenants.

I am now selling it for £990,000. Notwithstanding that there are a few improvement costs etc, to deduct, we would hope to benefit from the reduced CGT (8%) on the commercial part.

For this purpose I could value it as two thirds BTL and one third commercial. But that seems too simple, so I am thinking of asking the buyer to give me his valuers written opinion as to the separate values.

The other option is to employ a professional surveyor/valuer myself.

Does anyone have any comments on this or see any tax complications please?

Neil



Comments

Neil Patterson

13:56 PM, 16th May 2016
About 3 years ago

Hi Neil,

We have not run across this question since the Budget changes to CGT. This may be a really stupid obvious question, but have you tried asking/calling HMRC what they would want? Or do you have an accountant that can do this for you?

James Fraser

10:25 AM, 17th May 2016
About 3 years ago

You MAY get lucky. A combined commercial/resi unit (flats above shops etc owned as one building) is outside of Section 24 as it is deemed a commercial building. It would be nice for you if you were to discover that sale as a single lot/building has the same rules for CGT!

NEIL T

12:15 PM, 17th May 2016
About 3 years ago

I tried ringing HMRC twice, but it's a nightmare getting through, so I gave up.
My accountant suggested that I make a guess and allocate that amount as commercial!
Wouldn't it be nice if it could all be deemed as a commercial building for CGT purposes as suggested by James...!


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