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CGT on the sale of my House / building plots.

I am planning to sell my house (PPR) which has a large garden (less than 0.5hectare). To achieve the maximum cash I am selling the house and 2 building plots (part of the garden) all separately, as no developer will acquire all three. As they are to be sold separately how do I calculate the capital gain on the plots?

Is it a pure gain or do I need to establish the 82 value of the plots or is there something else?
Many thanks


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If you sell the land whilst you still reside there then there is no CGT. However if you are selling the plots with planning permission thenthe uplift in value is treated as a gain and CGT will apply. Regards Peter

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How do you calculate the base cost of the plots?

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Planning permission

I was under the impression that the obtaining of planning permission did not restrict principal private residence relief, See:

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we are selling the plots separately so assumed not covered by PPR

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Correct the "cost of Planning Permission" not the increase in value which can be substantial.

HMRC quote "you are denied ''only or main residence'' PPR relief where you spend money to realise a gain upon disposal.

You need face to fce well versed professional advice on this and a chartered surveyor to establish the vlaue of the individual plots prior and psot PP vlaue. Regards Peter

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HMRC quote "you are denied ''only or main residence'' PPR relief where you spend money to realise a gain upon disposal.

HMRC's manuals (see the previous link) state that expenditure on obtaining planning permission is ignored for the purposes of the above test.

I still think that, if the plots are part of your garden, have not been fenced off etc and are sold either before or with the principal residence, PPR relief is available despite planning permission having been granted.

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income tax?

possible that HMRC might argue for what used to be 776 - see BIM60305. Gaining planning permission per se should not be regarded as development in which case so long as you sell the land before or at the same time as your house (as indicated above) you should be able to get PPR.

Could be though with selling 2 plots HMRC may find some argument to go for 776.


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base cost

if you did decide CGT due base cost depends on sequence of sales

Say you sell plot one first. Identify base cost of entire property for CGT. Identify market value of the house/plot 2 ie what is then unsold. Base cost allowed is sale proceeds/sale proceeds plus this market value.

Then if you sell plot 2 do the same with regard to the "unused" base cost.

That is the formula for the part disposal of an asset. If you have already divided up the titles such that you have 3 assets might be a bit more complicated.

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Boy - how to make something so simple so complicated!!

This is really simple, and very well established.

If you sell the plots before or at the same time as the house there is no question of CGT. If you sell the plots after the house you will pay CGT on the gain. So why would you ever do the lattter - particularly when you can always engineer a sale to your own limited company if you need to to keep things in the right order??!!


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Stamp Duty, CGT and permitted land area

It is a long time since this topic was addressed.  I wonder if the detail is still correct.

My case is a little different:  My garden plot is 0.774  hectare, well over the half hectare rule!  I have planning permission to construct 5 new houses on the plot and retain the existing bungalow in which I presently live.  I intend to build a new house on one of the plots.  The order that things will occur is that two plots will be sold and I will start my build. A further two plots will be sold - I will complete my build and then finally sell the bungalow,

I am advised that it will be necessary to sell the 4 plots as a single plot to my private limited company first. The company will then split the single plot into four and sell them on.  As the commercial value of the four plots (sold as a single plot) will approach £450k The company (me) will pay around £12k in stamp duty.

The area of the four plots amounts to about 0.36 hectares.

Following this order of sale I will have to pay stamp duty and believe that I will also be lucky to avoid a capital gains bill as the area of the garden is greater than half an hectare.  Is there any point is bothering with the sale to the company if I may have to pay capital gains anyway?

There is one other factor.  The "garden" includes what could be describes as "natural woodland." Indeed I estimate that I could make a good case that the permitted area is only 0.44 hectares and the rest is low value woodland. If I sold the plots individually (omitting the limited company route) could I get PRR on the part of each plot that is within the permitted area and only pay CGT on the low value woodland area?  This might amount to less than the Stamp Duty and avoid suffering Stamp duty and the risk of CGT.

I know I need to consult a specialist Tax/Valuer but any comments will prepare me for such a meeting.


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