When is property rental treated as a business?

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When is property rental treated as a business?

Question:

When a rental property is sold, can it be treated as a business rather than investment for capital gains tax purposes if it is fully managed by the owner?

Arthur Weller replies:

A regular rental business will not be a trade, but it can qualify as a business (there is a difference in the tax legislation between a trade and a business). The leading authority in this area is the ‘Ramsay’ case, where the taxpayer showed that she was working at least 20 hours a week managing the rental properties; the court agreed that this qualified as a business. 

When a rental property is sold, can it be treated as a business rather than investment for capital gains tax purposes if it is fully managed by the owner?

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This question was first printed in Property Tax Insider in February 2020.