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TaxRobin
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We own a large house which we are getting planning consent

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We own a large house which we are getting planning consent to divide into three separate lots. We will have (once approved) the main house and garden, a separate Coach House with its own garden, and a large building plot. If we sell these separately, what is the capital gains tax liability?
We would hope to sell the large main house first, then to move into the Coach House, to sell the building plot and then later to sell the Coach House.
Submitted: 2 years ago.
Category: Tax
Expert:  Nicola-mod replied 2 years ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 2 years ago.

I don't mind waiting. Thanks, ***** ***** is a fairly simple capital gains tax question.

Expert:  Nicola-mod replied 2 years ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
Your situation is not as simple as one would think.
Your planning consent removes the properties from private residence relief.
If you sell the main house first you can apply private residence relief on that property.
If you move into the Coach House and nominate it as your residence then you would be allowed to claim private residence on it.
The sell of the plot will not be allowed relief because it is not part of either. You will pay CGT base don your gain at sell.
Customer: replied 2 years ago.

Thank you for this. However, if we move into the Coach House after we sell our main house, making that our primary residence, and keep the 'building plot' as the garden, can we not sell the part of the garden which is then a building plot as part of our house? If the answer is no, how will they value the building plot, as selling this separately reduces the value of the coach house, and the main house, albeit not by as much as the gain, but we would not have a net 'gain' of exactly equivalent to the price of the building plot.

PS I did not receive this answer until today. I had no message on my e mails to tell me it was waiting for me to read.

Expert:  TaxRobin replied 2 years ago.
If you are separating the garden from the property it is no longer the garden and a part of the main home.
The values would be determined when you separate the properties. If you keep the garden as part of the principle residence then you can include it at sale.
The e-mails sometimes are delayed (for me too).
Customer: replied 2 years ago.

Sorry, but I still don't quite understand.

Our intention is

1. to gain planning consent for the Coach House to become a separate dwelling, and for another property to be built on the orchard.

2. To sell the main house with a smaller garden and to move into the Coach House as our main residence, with the benefit of the orchard as the garden.

3 To then sell the orchard as a building plot, and continue to live in the Coach House.

Can you tell me whether we would need to pay capital gains on the building plot, and if we could claim the reduced value of the Coach House in mitigation, as clearly, the value of the Coach House with a garden will be a lot higher than one without.

Sorry to be a pain, but I would appreciate it if you could spell this out clearly to me.

Many thanks

Expert:  TaxRobin replied 2 years ago.
Let me split each of your intentions:
1. to gain planning consent for the Coach House to become a separate dwelling, and for another property to be built on the orchard.
They are no longer one property as of this action
2. To sell the main house with a smaller garden and to move into the Coach House as our main residence, with the benefit of the orchard as the garden.
Residence relief on the sale of the main and you can change the residence to the Coach House.
3 To then sell the orchard as a building plot, and continue to live in the Coach House. If the orchard is not a part of the new residence and is a separate plot, when sold it is subject to CGT.
The value would change for all the properties as you must separate them when you gain the permission. The value of the coach house will be reduced because the garden is a separate plot.
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Category: Tax
Satisfied Customers: 13559
Experience: International tax
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Customer: replied 2 years ago.

Thank you. I understand now.

Expert:  TaxRobin replied 2 years ago.
I am glad.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.

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