If you are selling property which is furnished and used for commercial purposes, you have a good news. You can get entrepreneur's relief and save money on taxes.
This means that the basic tax rate payer and the those paying their income tax at higher rate will be paying CGT at 10 % instead of 28%.
The announcement by Rishi Sunak that the CGT will remain at the same rate is seen as a relief for all those who are letting their rental properties and many property owners who were expecting that they will have to bear a high CGT on the sale are now analysing if they should sell the property now. So if your property qualifies for furnished holiday lettings make sure that you utilise the reliefs available. The reliefs available are entrepreneurs relief, business asset roll over relief and the gift relief.
To be eligible for all the CGT reliefs the property should meet the following criteria:
- The property must be available for commercial letting for at least 210 days in a year.
- The property must be let for at least 105 days in a year.
- The total of all lettings of more than 31 days is 155 days or less.
To be eligible for Entrepreneur's relief both of the following must apply:
- You are letting as a sole trader and not as a registered company
- You have been in the business for at least 2 years.
If both the above conditions apply, you will be able to pay the CGT at the reduced rate of 10 %.
If you are own more than one FHL and you are selling one of the properties you will have to consult and accountant whether the relief will apply to you or not as might not be treated as the business disposal.
How does it work ?
Step 1: Work out the gain from the property disposal
Step 2: If you are selling more than one property combine all the gains
Step 3:Deduct the annual capital gains tax allowance £12, 300
Step 4: You will be paying 10% on what is left.
Your property is stop being treated as FHL if it is used for the private use.
If you have more than one property in the UK it will be treated as one business for FHL purposes.
If you are looking for a property accountant contact Taxaccolega at 020 8127 0728. We are affordable accountants based in Croydon and South hall and our expert team will help you with all your taxes if you are buying or selling property or even If you are already in the property business and you want accountant to make rental accounts.
Source: www.gov.uk