CGT Question

[NevisTheCat]

Can I claim relief on CGT on roll over if use my gain from a business property (let house) to pay for a yacht on charter management?

Anyone any experience of rolling over a gain into a yacht?

 

[jfm]

Yes, but significant hurdles, and complex:

1. I am taking it as red that your real estate gain qualifies for rollover. Not enough info to decide that question.

2. The yacht would have to be taken into use and used only for the purposes of the charter business "immedaitely" upon its acquisition. In connexion with this (a) there is some flexibility on the word "immediately" but you are required to prepare it for business use (repairs?) "as soon as practicable" and to actually take it into business use "without unnnecessary delay"; (b) you cannot sail it privately for a few weeks, then start using it for charter - the Revenue are on written record 1981 on that point. So the very first voyage must be business related. And (c) the word "only" means the yacht must be full time charter boat, you cannot use it privately at all.

3. Normally point (c) above wouldn't be a problem. you would own the boat in a charter co and when you wanted to use it privately you could rent it off the charter comapny. But in your case I assume you made the gain on the real estate personally, and that means you must buy the yacht personally, not in a company, else there is no rollowver relief. but if you own the yacht personally, you will lose the rollover relief unless you never sail it privately ever, becuase you cant commercially rent an asset from yourself.

4. Also if you own the yacht personally and not in a company, as would be needed because you made the gain personally (I assume), you will be chartering it out personally. That is a problem re limited liability. If someone dies on board and sues you because the boat wasn't safe, or something, you get sued personally. No limited company to shield you

Sorry to be negative, these tax reliefs aren't all they're cracked up to be when you get to the small print (as your tax inspector ultimately will.....). If you succeeded on all the points, the maximum tax deferral is 10years

 

[VicMallows]

Thankyou for such a concise but clear view of the law ... might actually be useful.
(of course will not rely on your specifics).

Vic

 

[jfm]

On reflection, re point 3, you could ahem use it privately so long as a friend was with you, or your missus, and that person was renting the boat off you commercially perhaps for a standby discounted very small indeed fee. But you couldn't privately sail it single handed (except for business purpose, eg taking if for repair, testing, repositioning it for a charter, etc)

Sorry there were lots of typos in my above post

 

[Howardnp]

jfm says he's taking it as read that the property sold qualifies as business property as there's not enough info to decide.
I wonder.... if it is let prioperty owned by an individual then unless it is a holiday let it is very unlikely to qualify to enable the gain to be rolled over. Lettings are usually regarded as investmentsexcept for holiday ones.

If it does qualify remember that to get the full effect of rollover relief that you have to re invest subtantially all of the sale proceeds in the new asset and not just the gain.

Any bodged attempts at making the asset look like a business asset is fraught with problems as well... posting ideas on this forum isn't a good one for a kick off!

Sorry to be doom and gloom but it looks like a non statrter to me