Capital gains and new rules furnished holiday lettings

[makh]

I have 2 furnished holiday lets -one in u.k and one in spain.Under new rules for2012 the U.k. and spanish property have to be dealt with separetely. I can no longer use averaging for occupancy threshold and my spanish property will not qualify as a business asset anymore. The properties were bought by using ROLL OVER CAPITAL GAINS RELIEF. I will not be selling the spanish property but carry on letting .WILL THIS TRIGGER A CAPITAL GAINS Iam also concerned about losing 10% enterpreneurs capital gains relief.Is there any way of retaining this relief.I am assuming other people will have a similair problem and would welcome some advice

[mullet]

The Spanish property no longer qualifying as a business asset will not trigger a CGT charge, as it is not a disposal. You will simply continue to own the asset, and its qualifying expenditure (acquisition value) will remain the lower amount, i.e. having taken account of a rolled-over gain.

Entpreneurs' relief is an interesting point. Even if you sold the Spanish property now, I am not certain that ER would be available as I cannot see that this would be the disposal of a business or a distinct part of a business. HMRC use the example of a greengrocer with shops in two different towns. The sale of one shop is not the disposal of a distinct part of a business.

The way to preserve ER is to ensure that the property qualifies as a business asset for the full 12 months leading up to its ultimate disposal. This is a quirk of the legislation - there is no adjustment (for a material disposal) to account for a period when an asset was not a qualifying business asset.

[maths]

The "election" procedure may help re the Spanish property for up to two years after the last tax year when it qualified as FHL.

[chuhani9]

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