Commentary

C2.1102 Part disposals

Capital gains tax
Capital gains tax | Commentary

C2.1102 Part disposals

Capital gains tax | Commentary

C2.1102 Part disposals

On a part disposal of land or an interest in land, the allowable expenditure in computing chargeable gains or losses is found by applying the usual part disposal formula1 to the expenditure in respect of the entire interest before the disposal, excluding any expenditure attributable exclusively to the part disposed of or the part retained (see C2.403). The granting of an option over land by its owner for the option holder to buy the land is not a part disposal of the land concerned, but is a disposal of a separate asset, ie the option. If the option is exercised, the disposal of the option and the disposal of the land are treated as a single transaction2.

The requirement to compute allowable expenditure on a part disposal using the statutory formula means that the remaining land must be valued at the date of the part disposal. As a practical matter, agreement of land values may involve lengthy and therefore potentially costly negotiations with the District Valuer. It is therefore of some importance whether the interest disposed of may be regarded as a separate asset rather than part of a larger interest in land. This is generally a question of fact and it is relevant to consider how the interest which is the subject of the disposal was acquired.

A single acquisition of land may comprise several distinguishable

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