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Hiving off land from house

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I have a client who jointly owned a holiday let property with her sister.  At no time was it a PPR.  They decided to sell and, as it was a large plot, it was sold in two seperate lots being the land which had recently been given planning permission and the house.

Am I correct in thinking that the sale of the land will attract the 10% and 20% rates, as opposed to 18% and 28%? The land was sold prior to 5 April 2019 so will be pertinent for the current Return whilst the house wasn't sold until 2019/20.

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Hallerud at Easter
18th Nov 2019 10:51

I think you may need to have a look at TCGA 1992 Sch 1B. I think it was in point re 2018/2019 but you will need to check.

I think the land may well be considered residential, but it will likely depend if it was all garden, previous use of the land and location of the sold land relative to the house may also have a bearing.

It is not something I have had to really deal with but in general really doubt the bit of garden over which the house does not sit is not considered residential property

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By Accountant A
18th Nov 2019 11:58

I believe the legislation may shed some light on the question. Have you read that?

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By tonycourt
18th Nov 2019 17:53


Further to the previous responses (one helpful and the other illuminating).

The legislation you need to refer to is schedule B1 TCGA 1992 which was subsumed into and superseded by schedule 1B with effect from 6 April 2019. The effect of each is the same, that's to say whether the disposal was in 2018/19 or 2019/20 makes no difference to the rate of CGT payable on the gains - 18% and 28% rates will apply to both sales.

Sch B1 (1) says that the higher CGT rates apply if the asset disposed of "has at any time in the relevant ownership period consisted of or included a dwelling" and para 4 says:
(1) For the purposes of this Schedule, a building counts as a dwelling at any time when—
(a) it is used or suitable for use as a dwelling, or
(b) it is in the process of being constructed or adapted for such use.
(2) Land that at any time is, or is intended to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on such land) is taken to be part of that dwelling at that time.

Some types of residential property are specifically excluded, e.g. "... hotels, inns and similar establishments" but, in my view, this definition can't be stretched to include property used for FHL.

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