Tax on selling garage separate to house?

Would the sale of a garage not connected to my home be subject to CGT?

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I own a garage in a block of garages just up the road from my house. I bought it with the house. I am now selling the garage for £32k, while continuing to live in the house (which is my main residence). Is the sale tax-free or is it subject to CGT/other taxes? Are there any implications for the tax-free status of my home?

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By Tax Dragon
19th Jan 2021 06:51

Hi again Womble, sorry it's me again, I'm still not an HMRC-er.

A word of advice. This forum is no substitute for the services an accountant could provide you with. If you find yourself coming here on a regular basis, it may mean that your affairs are complicated enough to justify (maybe even necessitate) engaging an accountant.

The question you ask this time is one of fact, as much as law. There isn't a special rule for garages and the issue is whether the garage is part of your home (or, more precisely, part of the dwelling-house you call home). That's a matter of fact. If, on the facts, the garage is part of the dwelling-house, then the main residence exemption exemption is in point in relation to the garage. (Worth adding that HMRC takes a fairly pragmatic approach. The garage can be physically separate from the dwelling-house but still be treated as part of it. That's often the case with flats, of course.)

One matter of law is that, if you've just moved in, are doing the place up with a view to a quick sale and are maximising the return by selling the garage separately, it might not be tax-free anyway. There are other caveats.

So the only honest answer anyone can give here is: it depends.

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Replying to Tax Dragon:
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By womble7
19th Jan 2021 08:29

Thanks Tax Dragon. Yes, while it's physically separate - about 50 yards away from my house in a row of garages (a bit like your flat example), I regard it is part of my home (bought with the house some years ago; used for domestic storage; no commercial use; on the same Land Registry listing as my home). Would those be sufficient "facts" for HMRC to allow the main residence exemption on the garage? (Note I am not planning on selling the house anytime soon - and assume that benefitting from the main residence exemption on the garage would not preclude benefitting from this exemption on the house at a later date?)

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Replying to womble7:
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By Tax Dragon
19th Jan 2021 08:40

It would be nice to see it, but it sounds to me like the situation I've had all around me since I left my parents' place -garages in blocks slightly separate from their houses. And what there's been around me... well, I wouldn't expect HMRC to take issue with any of them.

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RLI
By lionofludesch
19th Jan 2021 07:47

I vote maybe.

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Replying to lionofludesch:
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By womble7
19th Jan 2021 08:47

Thanks - care to elaborate on your reasons?

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Replying to womble7:
RLI
By lionofludesch
19th Jan 2021 10:33

I'd just be repeating Tax Dragon's first post. It depends on whether it's part of your residence.

As you bought it with the residence, it sounds like it is.

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Replying to The Dullard:
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By Tax Dragon
19th Jan 2021 10:36

Sounds like the fairly pragmatic approach mentioned above.

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