Leases: merger of leases: disposal 29/6/92+: ESC D42
The facts are similar to those in the example in CG71420, but with a later date of disposal.
Mr J acquired a long lease in January 1985 for £30,000. In January 1988 he acquired the freehold reversion for £20,000 and the long lease was extinguished. In January 1993 he sold the freehold for £100,000.
The gain arising is calculated as follows
|Less||Cost of lease||£30,000|
|Cost of freehold||£20,000||(£50,000)|
|On cost of lease £30,000 x 0.512||£15,360|
|On cost of freehold £20,000 x 0.335||£6,700||(£22,060)|