ACCA Taxation (TX-UK) (F6) Capital Gains Tax – Individuals – Part 3

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1. james8500 says

   December 12, 2019 at 3:58 pm

   Hi

   Please see below question. Can anyone tell me why the incidental costs of acquisition of 1,500 were not used to calculate the unindexed gain?

   Thanks

   QUESTION

   Greenwood Ltd. disposed of an investment property on 31/12/2018.

   He received disposal proceeds of £115,000 for the property and incurred legal fees on disposal of £5,000.

   He has initially purchased the property for £15,000 and incurred incidental costs on acquisition of £1,500 on 31/12/2008.

   He had spent £25,000 to extend the property on 31/12/2010.

   Relevant indexation factors are:

   On cost 0.306

   On enhancement .0218

   What is his capital gain for the tax year 18/19?

   SOLUTION

   Disposal proceeds £115,000
   Incidental costs to dispose (£5,000)
   Net sale proceeds £110,000
   Acquisition cost (£15,000)
   Extension cost (£25,000)
   Unindexed gain £70,000
   Indexation allowance for acquisition (£5,049) (W1)
   Indexation allowance for extension (£5,450) (W2)
   Capital gain £59,501

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   • opentuition_team says

     December 12, 2019 at 4:32 pm

     Please post such questions on the Ask the tutor Forums!
     this comment will be deleted

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     • lina1377 says

       January 21, 2020 at 4:29 pm

       Hi I think it is because of the year 2008. I am not sure

2. Nicholas says

   February 7, 2019 at 1:39 pm

   Great and simplified lectures… Thanks a lot Sir

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