Commentary

C2.1107 Buildings destroyed or of negligible value

Capital gains tax
Capital gains tax | Commentary

C2.1107 Buildings destroyed or of negligible value

Capital gains tax | Commentary

C2.1107 Buildings destroyed or of negligible value

A building or semi-permanent structure in the nature of a building is in law part of the land on which it stands and the whole represents a single asset1. But for the purpose of the provisions described in this article, the building or structure is treated as a separate asset from the land on which it stands2.

Where a building is entirely destroyed (eg by fire), it is deemed to have been disposed of at the time of destruction, whether or not any capital sum by way of compensation or otherwise is received3.

Where a building has become of negligible value (eg by falling down or being abandoned), the owner may claim that the building be treated as having been sold and reacquired for a consideration equal to the value stated in the claim at the time of the claim or at an earlier time specified in the claim4. An earlier time may be specified if:

  1.  

    •     the asset was owned by the claimant at the earlier time

  2.  

    •     it had become of negligible value at the earlier time

  3.  

    •     the earlier time is not more than two years before the beginning of the tax year (for corporation tax, not earlier than the first day of the accounting period) ending not more than two years before the time of the claim5.

A negligible value claim can be made where either:

  1.  

    (i)     the asset has become of negligible value while owned by the claimant, or

  2.  

    (ii)     the

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