Individual purchased land 10 years ago and finally getting round to developing it. Options on the table are:
1) live in it
2) sell immediately
3) rent it out
Tax implications for each:
1) None initially, however upon future dispoal will need to apportion PPR from 2019, with past 10 years not included apart from the first 12 months)
2) Likely to be taxed via income tax rather than CGT, especially as his sole trade is a builder
3) Income tax on rental income
Subject to the above being accruate, the query I wanted to clarify is if he were to rent it out as a FHL subject to all conditions being met naturally, then its my understanding that as long as he runs it for 2 years he'll get ER - but on the full gain or just on the proportion of time it was used as a FHL ie 2 years?
Taking this a step further relating to point 1. I thinking we should advise to get a valuation on the land now before the build commences. Otherwise if he were to sell it in the future after a few years of PPR then a high proportion entire gain would be taxable, which doesnt reflect the facts. Is there any legs in noting now the FMV gain and arguing to HMRC that this is what should be taxed upon ultimate disposal?