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wulfrun
4th February 2005, 09:14
According to the Inland Revenue site Capital Gains Tax could be payable on the sale of a house if it has been used at any time for business purposes.

As a contractor I have (like lots of contractors) my limited company address as my home address. My contracting work is carried out at client premises. I just use my home for various bits of paperwork to do with the business.

Does anyone know if I will be liable to pay CGT on the sale of the house ?

Darren at 1st Accountancy Serv Ltd
4th February 2005, 10:37
Simply answer...no.

If you have put part of the cost of the house through the company...i.e. it appears as an asset on the balance sheet then it "may" be a different matter. If this is the case then best check it with an accountant.

Bradley
4th February 2005, 11:42
If you use a room in your house exclusively for work then you may well be charged CGT on that part of any gain relating to that room.

The defence against this is to put something like a bed in that room to show that the room is not exclusively used for business purposes.

I have to say that it is very unlikely in any event that you would be able to claim the costs associated with using a room for "work". That is because your contract would have to state that you would be obliged to work certain days at home. Otherwise the Revenue will argue that you've failed part of the test for claiming expenses as an employee of your own company.

Darren - showing part of the cost in the company balance sheet would mean that the company had some rights over the house and land which is obviously has a whole different range of tax consequences. The scenario is highly unlikely because most accountants would never advise that the company show part of the capital cost in the balance sheet. By doing so you lose the range of CGT reliefs and subject the contractor to double tax - tax on the company's gain then tax on the distribution of the cash raised.

Darren at 1st Accountancy Serv Ltd
4th February 2005, 11:47
"showing part of the cost in the company balance sheet would mean that the company had some rights over the house and land which is obviously has a whole different range of tax consequences. The scenario is highly unlikely because most accountants would never advise that the company show part of the capital cost in the balance sheet. By doing so you lose the range of CGT reliefs and subject the contractor to double tax - tax on the company's gain then tax on the distribution of the cash raised"

This is exactly the point was getting across, possibly not so detailed.....naturally would never advise anyone to put their private residence into the company because of the complications and mess it would cause, and have never met an accountant who has advised this be the best cause of action.