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My client owned a terraced residential property. In 2013 the house next door was completely demolished in a gas explosion. The adjoining properties which included the one owned by the client incurred structural damage. My client made a claim against the insurance company which challenged this.
A subsequent referral to the ombudsman upheld my client’s claim. The insurer then appealed the decision but without success. After much delay the insurers eventually paid out the maximum amount namely £92 000. In the meantime quotes had been received which made the renovation uneconomical. Consequently the client decided to sell the property at auction receiving £35 000 in 2018.
How should the insurance money and the proceeds of sale of the property be treated for tax purposes?
Query 19 349– Seller.
Reply by Al Garve
The receipt of compensation is a deemed disposal.
Both the insurance money and the proceeds...
