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Cost of property for CGT

Cost of property for CGT

A client has bought a bungalow to live in as PPR. His plan is to obtain PP to knock the bungalow down and build a pair of semi-detached houses. He will then move into one and sell the other. What will be the 'cost' of the semi sold for CGT ie will the increased market value of the bungalow once PP has been obtained be a factor in increasing the cost from the actual payments made?


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14th Aug 2007 14:29

Length of time
Thanks for that Euan. He hasn't started seeking planning permission yet and it could take some time. Will this be irrelevant ie will the scenario always be income tax rather than CGT irrespective of whether it is months or years?

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14th Aug 2007 13:40

Your client is trading
... as a property developer. He does not intend to live in the bungalow - he intends to demolish it and build a pair of semi-detached houses in one of which he intends to live. He will be subject to income tax, not CGT, on the sale of the other semi-detached house and will be able to set half of his total costs against the sale proceeds, assuming that there is no great discrepancy between the market value of the two completed semis.

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