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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4188
Experience:  FCCA FCMA CGMA ACIS
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My partner has sold some land to a developer and in exchange

Customer Question

My partner has sold some land to a developer and in exchange they are providing her(us) with a newly built house and a significant cash lump sum .....how can we minimise the tax on the lump sum?....she is retired and I work full time.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Unfprtunately, the lump sum is irrelevant. The sale of the land will attract Capital Gains tax (CGT) on the gain made on the disposal. This gain will be the difference between the purchase price and the disposal price. The latter will be the current market value of the site. This will probably have to be assessed by the Valuation Office Agency (VAO), part of HMRC staffed by by Chartered Surveyors. VOA is advised of all land transactions and although their main task is setting Council Tax bands and business rates they do have a very full knowledge of market values. You have no liability in this matter. Your partner will bear the full brunt of any CGT although she does have an Annual Exempt Amount (AEA) of 11.1K to offset any gain. The gain will be taxed at 18% or 28% or a combination of the two rates depending on her income including the gain in the tax year of sale. I assume that this land is a stand alone site. If it is part of the land attached to her sole or main domestic residence and the whole site is under half a hectare {about one acre) the Private Residence Relief (PRR) applies which relieves CGT at 100%. I do hope that my reply has been of assistance. I am so sorry to have to rain on your parade.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.