Commentary

C2.1213 Lease subject to onerous sublease

Capital gains tax
Capital gains tax | Commentary

C2.1213 Lease subject to onerous sublease

Capital gains tax | Commentary

C2.1213 Lease subject to onerous sublease

A lease does not rank as a wasting asset if at the beginning of the period of ownership it is subject to a sublease and (1) the rent payable under the sublease is not a rack rent (see below) and (2) the value of the reversion at the end of the sublease (as estimated at the beginning of the period of ownership of the reversioner) exceeds the allowable costs of acquisition1 of the lease2.

In such circumstances the superior lease is not a wasting asset during the currency of the sublease, but it reverts to

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