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Selling 1/2 a double plot - PPR or capital gain?

Before occupation of the first house, after implementing services is the sale considered PPR or CG?

We have this year bought a garden plot with agreed planning permission to build 2 separate houses but intention to build one as the vendor was only willing to sell both together. We are currently building our home on half the plot while our family rent elsewhere, we own no other home. We need to sell the second half of the double plot to fund our build and will have some uplift from the recent purchase price as and we will have implemented the services and drive etc that connect to our build and can subsequently be easily connected to by the second house. We will also have discharged the planning pre-approval that automatically apply to both builds when we apply for our own.
Does our build class as our principal primary residence before occupation? And does the act of us implementing the services etc for our own benefit create the view that we have begun to develop the second half of the plot and make us liable for capital gains, or not? 
Thank you in advance.

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14th Mar 2019 14:20

If you've never lived there, it can't ever have been your ppr.

If you want the CGT relief, you'll need to move in first.

Catch 22.

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By DJKL
14th Mar 2019 14:27

Not sure CGT applies, there is a whiff of income tax given intent appears to always have been your selling the second house plot.

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to DJKL
14th Mar 2019 14:32

Fair point.

The OP says that the intention was to build one but she doesn't say it was always the intention to sell the other half.

But - if it was - the PPR problem's solved. The profit will be liable to income tax and Class 2/4 NIC.

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to DJKL
14th Mar 2019 16:39

DJKL wrote:

Not sure CGT applies, there is a whiff of income tax given intent appears to always have been your selling the second house plot.

Presumably the OP is arguing that realising a gain on plot 2 was not one of the main purposes behind the acquisition. The way the question is written suggests that plot 2 was acquired in order to get hold of plot 1. Is S517B ITA 2007 where we should be looking? Not something I'm familiar with.

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to Accountant A
14th Mar 2019 16:44

I agree - I'm not sure the profit motive was there and I would be arguing that if it were my client.

However - I acknowledge the possibility.

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to Accountant A
14th Mar 2019 18:34

Exactly, our original intention was to keep the land as garden land and we did make this clear to the agent but the build costs - after purchase - came through as above our possible mortgage and we now need to sell.

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14th Mar 2019 15:50

What you need is an accountant who deals with property tax to go through the whole build with you, and point out what is a good idea and what is not.

I doubt myself there would be much of a gain on the second plot from joint services alone, that ought to be fairly neutral but the facts vary wildly on these matters.

I doubt its income tax unless you make a habit of this sort of a thing, but it might be. It needs some serious thought.. Id be impressed if you tax advisor got it as PPR relief, and they would probably be wrong!

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14th Mar 2019 16:30

See also TC05724 - Desmond Higgens FTT case for attempts to apply PPRR to a property that didn't exist.

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By DJKL
14th Mar 2019 16:39

Vat incurred (if incurred) on leading in services might also be a good reason to talk to an accountant as might also be possible CIS issues re same; the house plot for self is not the issue it is the second one for resale that needs examined.

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14th Mar 2019 18:58

Thank you for these interesting thoughts. Our original intention was to keep the second half as as garden land and we did make this clear to the agent during the purchase but the build costs - after purchase - came through as above our possible mortgage and we now need to sell.
Which of you are property accountants please? It seems a good idea to get thorough advice.

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