Help! Capital Gains Question - new user

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JoGreen
JoGreen Registered Posts: 9 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
Help!

If someone disposes of a property in a financial year and is due to pay Capital Gains on the sale proceeds, can the gain be offset against a purchase of a new property in the same financial year? I think the answer is no but I want to check....

Thank You:

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  • peugeot
    peugeot Registered Posts: 624 Epic contributor 🐘
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    H,

    It can by virtue of 'rollover relief'. This works by allowing the vendor of the asset to "roll" the gain over against the cost of a replacement asset.

    To qualify the old and the new assets must be used in the same business. If the asset is a 'property to let' then the gain cannot be rolled over unless the asset is a 'holiday let'.

    Best regards
    Steve
  • CathG
    CathG Registered Posts: 145 Dedicated contributor 🦉
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    I think rollover relief can be used with the business buying a different type of asset so long as it is an allowable one. (examples being land, buildings, immovable plant & machinery).
  • peugeot
    peugeot Registered Posts: 624 Epic contributor 🐘
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    There are two heads "A" and "B". Head A concerns buildings and B concerns fixed plant/machinery which does not form part of a permanent/semi-permanent nature of a building.

    You can even claim rollover relief on a spaceship!! Honest - I am not joking (see Section 156 TCGA 1992)
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    I think the main question needs to be what type of building is it?

    Is it a business asset or a property bought for rental (in which case an investment property)?

    Can you give some more information?
  • JoGreen
    JoGreen Registered Posts: 9 New contributor 🐸
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    Hi,

    It's a property that was bought for the purpose of "buy to let". The owner has sold this property and bought a new home to let as a "holiday" home in Dubai in the same financial year. Does this mean that the disposal can't be affset as the second property is not being use for the same basic purpose?

    Thank You
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    I don't think rollover relief is appropriate in this case.

    The original property is an investment property and the new property is a holiday let. As you have stated they are not in the same trade and the investment property is not seen as a business asset.

    Would welcome other opinions but I don't think the relief can be used in this case.

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