Hello
I would be grateful for your advise.
I own a leasehold flat including a cellar which is my personal residence since July 2017.
I plan to convert part of the cellar into a 1 bedroom flat. I would surrender my existing lease allowing formation of two new leases , 1 which will remain my private residence and the other (1 bed cellar flat) which would be sold.
I understand that the new lease for my private residence will not incur CGT, however for the new 1 bed cellar flat CGT on the gain will be applicable and calculated as below, is this the correct approach?
Existing flat
Bought £475k
Unconverted Value £650k
Refurbished costs £100k
1 Bed cellar flat
Bought £0k
Value £300k
Conversion costs £220k
CGT would be 75*/ 950k x 220k = £17k less annual allowance.
*(650-100-475)
If you have any questions please let me know.
Kind regards,
Derek
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