Capital Gains Tax

seanoge

Operated our house as a B&B for 20 years. Will CGT be payable when we sell at a profit?

barneystinson

seanoge wrote: »

Operated our house as a B&B for 20 years. Will CGT be payable when we sell at a profit?

Yes. The proceeds / gain need to be apportioned between exempt principal private residence, and taxable.

seanoge

Thanks. The house was a wreck when we bought it and I did a lot of work myself as we had no money. Is there any way I can offset the work I have put into it? Obviously the materials would have been claimed back but what about my labour? Hundreds of hours.

barneystinson

seanoge wrote: »

Thanks. The house was a wreck when we bought it and I did a lot of work myself as we had no money. Is there any way I can offset the work I have put into it? Obviously the materials would have been claimed back but what about my labour? Hundreds of hours.

Why would all the materials have been claimed back, if you were living in the house as your PPR?

seanoge

I am assuming the materials were claimed back. I would just give my accountant my receipts and he would give me a figure to pay tax. I only started paying vat about 4 years ago. If it's my PPR should I be paying CGT at all?

barneystinson

seanoge wrote: »

I am assuming the materials were claimed back. I would just give my accountant my receipts and he would give me a figure to pay tax. I only started paying vat about 4 years ago. If it's my PPR should I be paying CGT at all?

Well it's not just your PPR, it's also a business premises.

dogsears

seanoge wrote: »

Operated our house as a B&B for 20 years. Will CGT be payable when we sell at a profit?

If you're over 55 you may be able to claim what's called "retirement relief" -(even though you don't need to retire) in relation to the business part (i.e. the non-residential part). If you do qualify the capital gain on that part might be fully or partly tax exempt.

There are conditions to be satisfied though so (if you are indeed over 55) you need to talk about it with your accountant and if its beyond the scope of what he or she is comfortable advising on, consult a specialist tax adviser.

seanoge

dogsears, that's cheered me up a bit. Will put it all in accountants hands when it is sold and I'll mention "retirement relief".

MD1983

seanoge wrote: »

Thanks. The house was a wreck when we bought it and I did a lot of work myself as we had no money. Is there any way I can offset the work I have put into it? Obviously the materials would have been claimed back but what about my labour? Hundreds of hours.

no deduction for "own labour" - as others point out reliefs may be available to you

barneystinson

seanoge wrote: »

dogsears, that's cheered me up a bit. Will put it all in accountants hands when it is sold and I'll mention "retirement relief".

When did you stop doing B&B?

seanoge

Still at it. Hope to sell in next couple of weeks. 68years old, any difference?

dogsears

seanoge wrote: »

dogsears, that's cheered me up a bit. Will put it all in accountants hands when it is sold and I'll mention "retirement relief".

No worries, but I very much suggest you mention it to your accountant before the sale, so you know exactly where you stand.

NB The fact that you're over 66 and the sale will be after 31 12 13 makes a difference to the upper amount that can be CGT-free. Might not be relevant to your sale but lob it into the discussion anyway.

seanoge

If I sold all the furniture separately would that be taxable?

barneystinson

seanoge wrote: »

If I sold all the furniture separately would that be taxable?

The answer to that is it depends, but it could make a big difference to your entitlement to retirement relief when you subsequently sell the house - ie if you sell all the furniture, you'd have ceased operating a B&B, and if you've ceased running a trade prior to the date of sale then you wouldn't be entitled to the retirement relief.

Go and pay a few hundred quid for proper tax advice, it always pays for itself. If your normal accountant isn't on the ball about it go elsewhere.

Mr. Incognito

This is a property thread. Closed.