compulsory purchase capital gains tax

[Jancam]

I own a property in Middlesbrough which is to be compulsory purchased. It is due for demolition in the next three years. What is the situation regarding capital gains tax? The value of the house has gone up since purchased and I have only owned it for just over three years.

I understand that the shorter the time the property has been owned when sold the greater the percentage of capital gains tax - is this correct?

As I would not be choosing to sell the property (it returns good yields ) I feel doubly disadvantaged if the compulsory purchase is subject to tax penalties.

Would I have to pay any capital gains tax in this situation? Or a reduced amount?

[Tax Accountant]

I own a property in Middlesbrough which is to be compulsory purchased. It is due for demolition in the next three years. What is the situation regarding capital gains tax? The value of the house has gone up since purchased and I have only owned it for just over three years.

I understand that the shorter the time the property has been owned when sold the greater the percentage of capital gains tax - is this correct?

As I would not be choosing to sell the property (it returns good yields ) I feel doubly disadvantaged if the compulsory purchase is subject to tax penalties.

Would I have to pay any capital gains tax in this situation? Or a reduced amount?

There are no tax penalties. You have to pay CGT on this property like on any other property regardless of the Compulsory purchase order.

Taper Relief reduces the gain by 5% after 3 complete years and by 5% a year for every complete year thereafter until it reaches a maximum of 40% after 10 complete years.

Ramnik