BIM60115 - Land: Trading transactions: Acquisition and disposal of superior interest: Example

The following example demonstrates the point.

Tenancy acquired 1 January 1970: Cost: Nil.

Freehold acquired, subject to tenancy, 4 December 1991: Cost: £500,000.

Value of tenancy at 4 December 1991: £250,000.

Freehold with vacant possession sold 4 December 1991: £1m.

Capital Gain: There will be a capital gain by virtue of TCGA92/S161 based on the value of the tenancy at 4 December of £250,000 less the acquisition costs.

CASE I COMPUTATION