TAXATION COURSEWORK

Personal and Corporate Taxation Coursework



MODULE: NBS- 3A7Y

Personal and Corporate Taxation Coursework

Part A: Analysis of Taxation Implications of Property Ownership, Rental and Subsequent Sale

This part of the assignment deals with the calculation of taxable amount of Mr. Box's property. The role assigned to me is that of a tax advisor, in order to study the amount of income of his property along with studying its implications of taxation on a series of events.

Purchase of Residential Property = £350,000

Extension work costs= £ 50,000

Duration of ownership = 1 September 1990 to 30 September 2010

Sale of Property = £600,000

Let us work out the following heads and see how the property was given for taxation treatment and what are the tax obligations on Mr. Box

Chargeable gain on sale of the property

Amount received for Asset = £ 600,000 (sale proceeds) + £ 48,000 (income from savings) = £ 648, 000

Cost of Asset = £ 350,000

Sales proceeds minus Costs = £ 298, 000

Deduction of improvement costs for Asset= £ 298, 000 - extension costs - maintenance costs

= £ 298, 000 - £ 50,000 - £ 500

= £ 247, 500

In the absence of indexation allowance, total chargeable again = £ 247, 500

Gain exempts under principal private residence relief?

Capital Gains Tax is a self- assessment tax. It is the tax that we have to calculate and pay on our own, without having to be asked by the Revenue. It is the type of tax that is exempted only under certain circumstances. There are some cases where, even when there is a transmission, does not have to perform reverse of surplus:

Contributions of assets and rights made by the spouses to the marital partnership, the awards which take place in your favor and your payment and transmissions are made as payment for their spouse's common assets.

Transfers of property between spouses or in favor of the children as a result of enforcement of judgments in cases of marriage annulment or divorce (Yancey, 1999).

In the subsequent transfer of the land described in the preceding paragraphs, is deemed not to have stopped counting the years, regarding the calculation of goodwill (United Nations General Assembly, 1999). For example, a spouse buys a home in 1990 and got divorced in 1995, and is home to one spouse by court order. Later (2000), this property is sold, and the goodwill you have to pay is referred to the period 1990 to 2000, you do not take into account the transmission of 1995.

Why is such relief available?

A property tax exemption is a legislatively approved program to relieve qualified individuals or organizations from paying all or part of their property taxes (United Nations Conference on Trade and Development, Cornford, 2001). The following types of personal income are fully exempt from tax:

Most personal property owned by individuals is exempt. For example, household goods and personal effects are not subject to property tax. However, if these items are used in a business, property tax applies. Personal property tax does not apply to business inventories, or intangible ...