Estate Agent Today published an article yesterday which was brought to their attention by an agent.
The article source reveals that their is a risk of Capital Gains Tax (CGT) being levied on the vendors of properties that have a home office. This became apparent in a recent transaction they’ve been involved in.
The source from London, revealed:
“This property owner modified a large garden shed to become a sophisticated and comfortable home office, fully equipped for any professional wanting to work from home either on a temporary or permanent basis.
“Because working from home, at least as we now know it, has been rare in the past, the details were very explicit. But this ended up with tax office enquiries to the seller about applying for Capital Gains Tax on that proportion of the property used for work purposes, rather than purely residential.”
The potential risk to sellers surrounds so-called Principal Private Residence relief, or PPR, and the 1992 Taxation Of Chargeable Gains Act.
Section 224 of the Act states that areas of a private home ”used exclusively for the purpose of a trade or business, or of a profession or vocation” may be denied the PPR relief.
Have you had to raise any enquiries regarding CGT issues similar to this?