Avoiding CGT on selling part of my residence
5:54 PM, 3rd October 2014, 12 years ago
10
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My wife and I jointly own a detached house.
We have planning permission to convert the property to two semi’s and intend to sell one of the houses and retain the other as our own residence.
What is the best way to structure the sale to enable Capital Gains Tax to be avoided?
Thanks
Ray Selley
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Member Since January 2011 - Comments: 12212 - Articles: 1408
5:55 PM, 3rd October 2014, About 12 years ago
Is there a mortgage on the property Ray?
Has it always been your home, i.e. never rented out?
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Member Since July 2014 - Comments: 86
7:42 PM, 3rd October 2014, About 12 years ago
There is a mortgage Mark however it will be redeemed on completion of the sale.If my lender will give permission to alter the property i will borrow from family and redeem the mortgage before commencement of the division.The propertyhas never been let and has been our main residence for 25 years
Member Since January 2011 - Comments: 12212 - Articles: 1408
11:50 PM, 3rd October 2014, About 12 years ago
Just a quick thought but please consult a tax adviser.
Why not sell your home, before any work is done, to an SPV limited company and claim residents relief on the sale? Then sell one semi on the open market and the other to yourself for the same price. Any profits on the development will be taxed at the lower Ltd. company rate. You could then take advice on the most tax efficient way to invest the company profits, e.g. Into a self invested personal pension scheme “SIPP”.
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Member Since July 2013 - Comments: 34
2:39 PM, 4th October 2014, About 12 years ago
As Mark says time for a chat with a Chartered Tax Adviser or even just a really good Qualified Accountant, just to add a wrinkle, if you sell one of the newly converted semi soon after development CGT may not be your issue, you may find HMRC view you as a Developer and seek tax and Class 4 NIC from you …
This is why taking the right professional advice really is worth the money it costs 🙂
Good luck with your venture into ….. property development?
Jason
Member Since October 2014 - Comments: 1
8:41 AM, 9th October 2014, About 12 years ago
Will the Local tax office be able to advise or what about their website ?
Member Since October 2014 - Comments: 1
9:35 AM, 10th October 2014, About 12 years ago
An excellent and very informative article with some great advice by members.
Member Since January 2011 - Comments: 12212 - Articles: 1408
10:00 AM, 10th October 2014, About 12 years ago
Reply to the comment left by “Mark Hudson” at “10/10/2014 – 09:35“:
Thanks Mark and welcome to Property118 🙂
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Member Since August 2014 - Comments: 6
2:09 PM, 11th October 2014, About 12 years ago
Dear Ray,
Inevitably it is a bit of a mine field but may be worth you taking a look at http://www.taxcafe.co.uk but be sure to read as much as possible on the subject as there are lots of caveats!!
Member Since December 2014 - Comments: 9
10:08 AM, 27th December 2014, About 11 years ago
I purchased a flat from council under the right to buy scheme. cost £17.5k yes £17.5k lived there for 4 years then purchased my own house. I rented the flat out from 2003 until present day. Is CGT calculated on the value of the flat when I purchased it OR the amount I paid for it. Flat is now worth 185k.
Member Since January 2011 - Comments: 12212 - Articles: 1408
10:56 AM, 27th December 2014, About 11 years ago
Reply to the comment left by “Alan bus” at “27/12/2014 – 10:08“:
Hi Alan
This article explains how CGT will be calculated when you sell >>> https://www.property118.com/capital-gains-tax-relief-on-a-property-you-have-lived-in/
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