Sale of leasehold

Simple question: is the sale of a leasehold property subject to CGT? Or is the profit just subject to normal business income?

 

"Sale of leasehold property" ?

Do you mean granting or assigning a lease?

Or do you mean the landlord (freeehold) selling a property subject to a lease ?

Depends upon surrounding circumstances. If the property is on capital account then likely only CGT will apply.

Granting/renewing a lease or sub-lease is CGT event F1, or assignment of a lease is CGT event A1.

Any capital gain is disregarded to the extent it is assessable under another provision (other than CGT), s.118-20.

 

@Rob G - More akin to the assignment of a long term lease (not residential).

 

Sounds like CGT event A1.

Generally ... cost base will be any lease premium you initially paid plus any premiums for variation, plus non-deductible incidentals. Any lease document costs would have been deductible under s.25-20 if you used as a commercial property and would be excluded from your cost base.

There could be other issues depending on specific facts.

 

So you're saying if you own a commercial property & your tenant sells their business and you assign the remaining portion of the lease to the new incoming tenant, you are liable for CGT?

 

The tenant may be liable

 

Oh ok. So a "leasehold property" means the actual business that the tenant of the property is operating. It's got nothing to do with the commercial property itself.

 

The lease is being assigned in addition to the 'business'. i.e. the tenant will become someone else.