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Selling land for building: Ensuring main residence relief applies

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4th Jun 2018
AccountingWEB
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Jennifer Adams considers the tax implications of selling part of a garden for development.

Last year (2017), the number of new homes built reached its highest level since 2008 but even so, this figure falls well short of government targets. The Mayor of London's 'London Plan' gives an indication as to how this number may be increased by imposing numerical targets for building on what is termed 'small sites' in each London borough. 'Small sites' will undoubtedly include building within the grounds of properties with large gardens.

Capital Gains Tax (CGT) will be the usual tax point on the sale of any land but in certain circumstances income tax may also be charged, as well as there being the potential of stamp duty land tax, VAT, and even inheritance tax.

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By Martin B
04th Jun 2018 15:17

Selling land for building: Ensuring main residence relief applies

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By Yorick
06th Jun 2018 11:08

Nobody seems to bat an eyelid in England about sacrificing ever more land to construction, for which the weasel word "development" was invented and is used to sugar the poisoned pill. Building means in the main turning live land into dead land. Should anyone wish to turn over part of their garden to building, I am in favour of the hardest possible tax liabiliities being imposed upon them as a deterrent. I long for the day that environmental considerations become part and parcel of all real estate tax provision, but I know I am a voice in the wilderness. All factors are playing in favour of the powerful construction lobby. Instead of tax penalties for extra residents in single homes how about tax relief for those who take people into their home? Bit off subject but anyway.

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Replying to Yorick:
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By johnjenkins
06th Jun 2018 11:48

Not having a pop at you but pray tell where all our children will live considering we are living longer. That's not even considering the extra 300,000 net immigrants per annum. Then there's the large commercial storeage facilities and the third runway etc. etc.
What we really need is for an architect to re-design our country with a motor rail traffic system instead of the now defunct rail and road crap that we have today.

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Replying to Yorick:
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By sunshine
06th Jun 2018 13:02

Not a voice in the wilderness - I'll bet it's the majority opinion, but we all watch on helplessly as our green spaces disappear.
Population control is the only effective answer to our housing and environmental crisis, but I have no idea how we'd achieve that.
Taxing second properties harder and stopping foreign investors buying up properties would do a little to help reduce demand.
I guess stopping tax credits for 3rd and 4th children might be helping too in a small way.

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Replying to sunshine:
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By johnjenkins
06th Jun 2018 13:46

Any tinkering will only delay the actual fact that we must look at ways of living for the next 200 years and how best to achieve that balance. Our infrastructure cannot support people at present let alone the next 100 years (which people who are born now would live to). The world needs a good look at our food chain, accomodation, transport etc. and come up with a plan that will give everybody what they need (not want). Pie in the sky though.

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Replying to sunshine:
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By tonyleigh
26th Jun 2018 18:49

Agreed, the government needs to do more to control our population. As well as limiting immigration, it needs to persuade people to have fewer children. Can't see it happening though - governments generally tend to do things that get them re-elected, rather than what's best for the country. And a growing population implies a higher proportion of younger tax-paying workers, which helps them keep taxes down. The UK is one of the most densely populated countries in Europe, and England is now _the_ most densely populated (except Malta, which is a bit of a special case, being a small island with avery attractive tax regime). At some time, growth has to be stopped, and ideally reversed.

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By vstrad
06th Jun 2018 11:14

What if the client builds a house in his garden, downsizes into it and then sells the original house with part of the original garden?

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Replying to vstrad:
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By johnjenkins
06th Jun 2018 11:49

Ask your Accountant.

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Maytuna
By DJKL
06th Jun 2018 12:22

Selling land for building: Ensuring main residence relief applies- Flagged Post

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By eastangliantaxadvisor
06th Jun 2018 13:18

I'm not too sure that an election under TCGA 1992 s 161(3) can be made if the asset is transferred to the limited company. This election could only be made if the owner carries on the business themselves.

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