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Private residence exemption -cgt

Private residence exemption -cgt

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A house is to be sold together with garages which have planning permission for conversion to dwellings. Est value of garages in isolation with planning - £150k. However all will be sold as one - house and garages. The vendor is a builder.

Any reason why the whole disposal will not qualify for private residence exemption?

Kevin Salter

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By wdr
28th Nov 2003 15:48

Half a hectare? Were the garages investment property ?
If the entire site does not exceed half a hectare[about 1.2 acres]then at first glance it would appear that the proceeds should qualify for main residence relief.

A problem can arise , however, if even though the entire site was less than half a hectare, the garages were in practice a separate investment property. The Revenue can then argue that the garages did not constitute land which he had for his own occupation and enjoyment with the residence as its gardens or grounds.

What was the time scale, for example? Did the client apply for planning consent very shortly after acquiring the house and garages?

It is never easy to argue cases where the vendor is a builder. The Revenue are more likely to argue either that the whole proposition was a dealing transaction , or that s224(3) applies because the acquisition was made in the first place wholly or partly with a view to making a gain in relation to it.

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