Re: CGT - 2nd Property, treatment of further costs
- From: Ronald Raygun <no.spam@xxxxxxxxxxxxxxxxxxxxx>
- Date: Tue, 30 Aug 2005 17:28:26 GMT
naffer wrote:
> I am getting too close to the calculations and need a little advice.
>
> A property was bought in 1985 for £30,000 (inc all the allowable
> purchase expenses).
> It was substantailly upgraded in 1990 at a cost of £10,000.
> It was further upgraded in 2000 at another £10,000
>
> Assume that itt will be sold in 2005 for £300,000 (again net of the
> allowable sale costs).
>
> I apprecaite that indexation should be applied to the initial build to
> derive a notional 1998 value and taper relief can be taken on the gain
> from 1998 to today.
>
> What confuses me is how the upgrades are treated. Where in the
> timeline are they placed.
>From the £300k net sale proceeds you subtract:
(1) The £30k gross acquisition cost.
(2) The first £10k upgrade cost.
(3) The second £10k upgrade cost.
(4) Indexation for (1): £30k times the 1985 factor.
(5) Indexation for (2): £10k times the 1990 factor.
No indexation is applied to the 2nd £10k upgrade since it was after 1998.
Taper is then applied to this result, based on 7 whole years of
post-April-1998 ownership of the whole property, that is to say I
understand that the fact that the second upgrade hasn't existed for
those whole 7 years doesn't matter.
.
- References:
- CGT - 2nd Property, treatment of further costs
- From: naffer
- CGT - 2nd Property, treatment of further costs
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