Taxation Essay Example | Topics and Well Written Essays - 1500 words - 3

Taxation - Essay ExampleThe first problem involving Ms. Vaughan involves a sale of a house giving rise to the payment of Capital Gains Tax (CGT). CGT dope only arise on the disposal of an asset, which is this case is the house. However, non all sales of properties are message to CGT. The most common exemption and is relevant to the case we have is the sale of a persons principal private residence.In identifying whether such sale is taxable or not, let us watch into the features involved in the case. Ms. Vaughan bought the property in Brechin in 2 January 1982. She resided in that house until May 1984 in the first place moving to Germany. From then on until 31 August 1990, she did not reside in that house not even on holidays. She lived in that house again from June 1995 until May 2002 where at the same time, she lend a large portion of the house to a tenant. In June 2002, she moved to Liverpool and was never able to live in the house in Brechin again. The question now is wheth er or not the house in Brechin is the primary resident of Ms. Vaughn.A primary consideration in determining whether such house is the primary residence of a person is the time spent is that place and the intent to go back to such place and appoint residence. Under our tax code, residence simply means the place where one lives. Determining ones residency is parasitic on ones length of stay, number and frequency of trips to the place (i.e. habitual stay) and the intention to stay in that especial(a) place. Judging by the amount of time Ms. Vaughan spent in the property in Brechin and the fact that she lent the house to a tenant while she occupied only a portion thereof belies the fact that she wants to establish the place as her primary residence. Thus, such sale of property do not fade under the exemption provided for under the law.The indexation allowance in capital gains tax is computed based on the indexation respect of March 1982. It must be noted that implementation for in dividuals of