I have a large garden and am confident I can obtain planning permission for a bungalow to be built in my garden. If I decide to sell the plot (without building the new home) am I liable to pay Capital Gains Tax?
2006-10-02 06:19:47 · 5 answers · asked by nicksname 2 in Business & Finance ➔ Taxes ➔ United Kingdom
Mom Knows Nothing - Actually I bought my house and the land came with it. I posted this in the UK section. We do not pay capital gains tax on primary residence here. Hence I am wondering if I have to pay CGT as I will be selling land that is part of my primary residence. Please consider where the person lives when you are good enough to repspond... There is a world outside of Alabama you know!
2006-10-02 06:32:14 · update #1
UK answer - the principal private residence (PPR) exemption from CGT can include grounds in keeping with the nature of the house. So if you were to sell the whole property the gain would be exempt, including that which relates to the garden.
Where the land is sold separately from the house, the gain can still qualify for PPR relief as long as the owner had 'occupation and enjoyment' (in the legal sense, rather than having to be a keen outdoors type!) of the land with the residence at the date of sale.
Simply put, if you sell it now and the purchaser builds, no tax for you. If you build and sell, the new house is clearly not just the garden of your old house, so the gain would be taxable.
One way around this would be to actually live in the new residence for a period and make the appropriate PPR elections. Although the general intention is that it is only possible to have one PPR at any given time, there are exceptions. In particular, the final 36 months of ownership of a property that has at some point been your PPR is exempt - so, if you actually live in the new house for a period it would be possible to totally exempt the gain without necessarily jeopardizing relief on the original property.
You would need to see an accountant to ensure you do not fall foul of the detailed rules though. Shouldn't be too expensive, especially in comparison to the potential tax saved!
2006-10-02 07:49:09 · answer #1 · answered by guido74 3 · 0⤊ 0⤋
Yes, if you sell it for more than you paid for it. I don't know what the point is of your referring to plans to build a bungalow on it. With or without a house on it, sale of real estate is subject to capital gains tax, with certain exceptions.
2006-10-02 06:22:04 · answer #2 · answered by MOM KNOWS EVERYTHING 7 · 0⤊ 1⤋
Yes you are, but you will be allowed about £8k of the gain tax free in a tax year. The calculation is based on a complicated formular of what you paid to get it, priced up to todays prices
2006-10-02 06:32:32 · answer #3 · answered by Welshblade1 2 · 1⤊ 0⤋
purely the place of living and a real looking quantity of land are coated via inner maximum place of living relief. as much as 0.5 Hectares will immediately be referred to as approved, yet extra would be allowed despite if it quite is retaining with the style of assets. in spite of the undeniable fact that, you may purely get relief on the section which you have used as your house of living. Any component of the land that has been used commercially isn't component of your house of living, despite if to procure it on a similar time. if your place has a backyard, PPR would be due on the homestead and the backyard, and no extra. the the rest section will attraction to PPR.
2016-10-18 08:52:08 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Yes.
2006-10-02 06:21:56 · answer #5 · answered by Privratnik 5 · 1⤊ 0⤋