Capital Gains Tax on owner occupied B&B

[Oneeyedvic]

I have a friend who purchased a B&B a few years ago for �82,500. It is currently on the market for �225,000.

This is his only property and where he lives.

There are 7 letting rooms and his own accommodation comprises of a living room, kitchen, bedroom and a couple of utility rooms. Reckon that square footage of around 35% domestic, the rest commercial.

Any ideas on the CGT implications?

[kags]

He will need to agree with HMRC the proportion of the property which is his Principal Private Residence - this proportion of the Capital Gain will be exempt - I would imagine they will accept any reasonable calculation, but if they dispute it they can obtain their own survey of the property. The balance of the gain should attract taper relief of 75% (if it has been owned longer than 2 years. ) If he is intending to re-invest the proceeds in another business, he may be able to defer the Capital Gain. He will also have his annual CGT exemption provided it is not already used elsewhere.
Obviosuly these are general guidelines and it's best to get professional advice on the specific circumstances.

[kags]

hmmm - ignore that answer for now, I think there may be a problem with the taper relief if it is amixed use asset - I will have a check for you

[kags]

No - I was right, it is ok to apportion the element attracting business taper relief.

[kags]

One thing to bear in mind as well is that if any element of the purchase price is attributable to the goodwill of the business, it will have to be removed from the equation before the PPR apportionment, and the 75% taper relief applied to it in its entirety.