This is a freeview 'At a glance' guide to how to compute a capital gain or loss for individuals and trustees.

How do you calculate a capital gain or loss? What costs are deductible? How can losses be utilised against capital gains?


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when calculating CGT do we deduct expenses including enhancement and then residential relief and letting relief or deduct residential relief and letting relief before before expenses and enhancement.

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Hi

Can you explain the cgt for a rental business limited company?

Capital gain via sale or loss via depaoit loss

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Very useful note, thank you.
Can I run by you an example of a sale of part of a property to confirm the operation of the A/A+B rule?
I need to be able to confirm that there is no exclusion from the A/A+B rule hidden away that applies where the...

Very useful note, thank you.
Can I run by you an example of a sale of part of a property to confirm the operation of the A/A+B rule?
I need to be able to confirm that there is no exclusion from the A/A+B rule hidden away that applies where the retained part of the property will itself qualify for principle residence relief?
In this example, the property consists a single dwelling on a large plot (6 acres) and has an original cost of £1.6m.
A paddock consisting five acres of the land (which is bare land with no buildings on it) has now received planning permission and can be sold for £1.5m. The house and remaining 1 acre of land is valued at £1.7m and is being retained but is likely to qualify for principle residence relief when sold at some later point..
Clearly, if the original cost was being allocated to the paddock land being sold by reference to the expenditure actually spent on that land, then only c.£100k would be allowed so c.£1.4m of the sale proceeds of that land would be liable to CGT.
However, applying the A/A+B rule in these circumstances means that a large part of the total £1.6m base cost can be used to shelter the gain on the paddock. The formula (i.e. 1.6 x (1.5/1.5+1.7) produces an allowable deduction of c£750k against the proceeds of sale, which basically cuts the resultant taxable gain in half.
If the part of the property retained – i.e. the house plus 1 acre - was not going to qualify for PPR then the fact that the amount of the original base cost which would remain available to be deducted against the proceeds on a sale of that retained property would be the logical answer. However, on a sale of the retained property in this case, the existence of some unused original cost is irrelevant as the entire gain would be exempted in any event due to the PPR rules.
Am I missing something? Applying the A/A+B rule in these circumstances does seem particularly generous of the revenue as it allows so much original cost to be used to shelter a gain on a part of the property which did not in fact have any material amount expended on it (either in acquisition or improvement).
Thank you

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