What I am trying to understand is - if I split the title and then decide not to go ahead with the conversion and sell the the whole plot i.e. both titles to a single buyer - would the total plot still be considered my main residence for the purposes of CGT? Or would the fact that there are 2 titles have any effect?
Hi Thanks for your response
Yes, there will be - as
1) you would have split the title thereby creating an intent to "gain" from this arrangement (even if you then go on to sell as one transaction)
2) Even if the title was NOT split - you are making a sale with land in excess of 0.5 hectares
Even if you had not applied for a separate title, due to the fact the size of the land in which this property lies in, being in excess of 0.5 hectares, HMRC would have looked at whether capital gains should apply. But the application for a split of the title automatically puts this into a position where a consideration to profit from this arrangement has arisen, so HMRC will argue (successfully) that whether this sale is one transaction to one buyer OR 2 transactions to one or two buyers, that a capital gain position will apply.
If you sell the main house and the half grounds, then this sale is going to be exempt from capital gains as long as
1) sold within 18 months of vacating the property
2) That it had been the main residence throughout
If you then move into the redevelopment, then any gain will not arise for consideration until that plot is sold, but it will be recognised, that it had belonged to the whole plot of land, and had been in excess of 0.50 hectares, and capital gains for the period of ownership PRIOR to it having become part of your main residence will need to be established.
And if you do not move into this redevelopment and just sell - then a capital gain position will arise.
Let me see if I have this clear in the different scenarios!
I need to be sure on all the scenarios as I do not want to compromise myself by splitting the title too early.
Scenario 1 – Sell the whole plot now as a single title –
Scenario 2 – Split the title into 2 plots of 1.6 acres but sell both in a single transaction before any development takes place.
Scenario 3 - Split the title into 2 plots of 1.6 acres, develop the outbuildings and move in, sell the main house within 18 months.
Scenario 4 – Split the title into 2 plots of 1.6 acres and sell both plots separately.