Part disposal and PTC: disposal costs in relation to Chargeable Gains

Hi there

this is on the PTC
I have a piece of land that I bought for £41500

I sell 4 acres of it which leaves 6
I sell it for 38000, and there were £3000 of costs in the sale. the remainder is valued at £48000

I know the formula is orginal costs X Proceeds/Proceeds+market value of part remaining

In this case is the proceeds in the calculation 38000 less £3000 or £38000

many thanks

Karen

Comments

  • wonderwife2008
    wonderwife2008 Registered Posts: 41 ? ? ?
    You can always deduct any associated selling costs from the proceeds as part of a capital gains calculation.
  • pirate
    pirate Registered Posts: 469
    Hi Wonderwife2008

    Ok so does that mean in the formula that I use to calculate the cost of the item (becuase it a part disposal) do I use £38000 or £35000

    thanks
  • meibaker
    meibaker Registered Posts: 481
    i think you should use 35000
  • wonderwife2008
    wonderwife2008 Registered Posts: 41 ? ? ?
    Ah my age old problem of misreading the question ...

    don't deduct the selling costs from the proceeds used in the calculation to find the original cost

    ONLY deduct the selling costs in the capital gains calculation
  • agatha
    agatha Registered Posts: 41 ? ? ?
    in the formula you should use 38,000 so it would look like this 41,500 x 38,000/38,000 +48,000 which will give you 18,337
    Proceeds -38,000 less cost of sale 3,000 will give you net proceeds of 35,000 and from that figure deduct cost of that plot you sold which is 18,337 the result is 16,663 which is the chargeable gain (i think!)
  • pirate
    pirate Registered Posts: 469
    ok thanks now need to drill in my head lol
    at my age big problemo
  • meibaker
    meibaker Registered Posts: 481
    can you explain why please?
    arent we losing out 3.000?
  • wonderwife2008
    wonderwife2008 Registered Posts: 41 ? ? ?
    No because the £3000 is deducted from the PROCEEDS in the capital gains calculation NOT the formula used to calculate the percentage of original cost
  • meibaker
    meibaker Registered Posts: 481
    ahhh, i see. thanks a lot for the information!
  • agatha
    agatha Registered Posts: 41 ? ? ?
    exactly, the formula to compute chargeable gains looks as follow:
    Disposal LESS incidental cost of disposal= Net proceeds LESS cost =Chageable gain

    cost of disposal has nothing to do with calculating the cost of asset or part of the asset
Privacy Policy