Part Sale of a Property and Long & Short Leases
Part Sale of a Property
This applies where you are disposing of part of an asset. This could be for example selling some of the land and not the property or vice-versa.
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.
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.
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.