Avoiding CGT on selling part of my residence

by Readers Question

17:54 PM, 3rd October 2014
About 4 years ago

Avoiding CGT on selling part of my residence

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Avoiding CGT on selling part of my residence

My wife and I jointly own a detached house. Avoiding CGT on selling part of my residence

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



Comments

Mark Alexander

17:55 PM, 3rd October 2014
About 4 years ago

Is there a mortgage on the property Ray?

Has it always been your home, i.e. never rented out?
.

ray selley

19:42 PM, 3rd October 2014
About 4 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

Mark Alexander

23:50 PM, 3rd October 2014
About 4 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".
.

Jason Holden

14:39 PM, 4th October 2014
About 4 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

Chris Allen

8:41 AM, 9th October 2014
About 4 years ago

Will the Local tax office be able to advise or what about their website ?

Mark Hudson

9:35 AM, 10th October 2014
About 4 years ago

An excellent and very informative article with some great advice by members.

Mark Alexander

10:00 AM, 10th October 2014
About 4 years ago

Reply to the comment left by "Mark Hudson" at "10/10/2014 - 09:35":

Thanks Mark and welcome to Property118 🙂
.

Jacqueline Davies

14:09 PM, 11th October 2014
About 4 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!!

Alan bus

10:08 AM, 27th December 2014
About 4 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.

Mark Alexander

10:56 AM, 27th December 2014
About 4 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 >>> http://www.property118.com/capital-gains-tax-relief-on-a-property-you-have-lived-in/
.


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