Sale of Property & Shares >> Part Sale of a Property

This applies where you are disposing of part of an asset. There is a special formula involved known as the A / A+B rule where A is the amount of the sale proceeds received for the part of the asset disposed off and B is the market value of the remaining part.

Part Disposal Example

• John bought a house for €100,000 in 1990.
• He converted the house into two apartments at a cost of €50,000.
• He is now selling one of the apartments for a net of costs €400,000.

How much Capital Gains is due?

Step 1. Calculate the Cost Price

Step 2. Apply Formula

Assume remaining apartment is worth €500,000, as it is bigger than the one being sold.
The formula for this is

In this case it works out as:

10.1 The Sale of a Property By the Grant or Sale of a Long Lease

• A long lease for Capital Gains Tax purposes is a lease, which has more than fifty years to run.
• This is treated the same as an outright sale of the property.
• The proceeds or key money received is used as the sale proceeds and this figure should be entered into the calculator for an outright sale.
• The calculation of the cost price etc. is the same as for an outright sale using the part disposal formula if required when dealing with the grant of a long lease.

10.2 The Sale of a Property By the Grant or Sale of a Short Lease

A short lease for Capital Gains Tax purposes is a lease which has less than fifty years to run.
Two different situations can arise here:

• Straight sale of a short lease for which you may or may not have paid key money when you first acquired the lease.
• The granting of a short lease with key money out of a freehold or long leasehold interest.

The rules dealing with both of these situations are complex and can involve both Income Tax and Capital Gains Tax complications. Because of these complexities each individual case must be examined on its own merits.
We provide this service by way of consultation and an additional charge will arise for dealing with same.