Part disposal and PTC: disposal costs in relation to Chargeable Gains
pirate
Registered Posts: 469 Dedicated contributor 🦉
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
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
0
Comments

You can always deduct any associated selling costs from the proceeds as part of a capital gains calculation.0

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
thanks0 
i think you should use 350000

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 calculation0 
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!)0 
ok thanks now need to drill in my head lol
at my age big problemo0 
can you explain why please?
arent we losing out 3.000?0 
No because the £3000 is deducted from the PROCEEDS in the capital gains calculation NOT the formula used to calculate the percentage of original cost0

ahhh, i see. thanks a lot for the information!0

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 asset0
Categories
 All Categories
 1.2K Books to buy and sell
 2.3K General discussion
 12.5K For AAT students
 322 NEW! Qualifications 2022
 164 General Qualifications 2022 discussion
 11 AAT Level 2 Certificate in Accounting
 56 AAT Level 3 Diploma in Accounting
 88 AAT Level 4 Diploma in Professional Accounting
 8.8K For accounting professionals
 23 coronavirus (Covid19)
 272 VAT
 92 Software
 273 Tax
 135 Bookkeeping
 7.2K General accounting discussion
 200 AAT member discussion
 3.8K For everyone
 38 AAT news and announcements
 345 Feedback for AAT
 2.8K Chat and offtopic discussion
 582 Job postings
 16 Who can benefit from AAT?
 36 Where can AAT take me?
 42 Getting started with AAT
 26 Finding an AAT training provider
 48 Distance learning and other ways to study AAT
 25 Apprenticeships
 66 AAT membership