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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4199
Experience:  FCCA FCMA CGMA ACIS
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I am considering extending my 4 bedroom detached house to 6

Customer Question

I am considering extending my 4 bedroom detached house to 6 bedrooms and then dividing the property into 2 semis, a 4 bed & 2 bed. the original detached property is valued at £290k, the new property estimate values are £245k & £140k, the work to extend and complete the project is quoted at £110k. to include new drive way construction, separating gardens with fencing and boundary fencing
please can you help me with estimating if and how much tax will be paid on this. my wife and I are in full time employment, we have lived in the property for over 20 years
we plan to remain in the 4 bed but only sell the 2 bed!
if you could offer me any advise it will be appreciated, have tried contacting my tax office and they cannot help me until I submit invoices and details after work and sale of property is completed
regards
Andrew
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. Before I can respond I need to know the overall size of the property on which your house stands. One I know this I can assist you further.
Customer: replied 1 year ago.
current detached house is approx. 15m x 5.2m, land property stands on is approx. 28m x 21m
Expert:  bigduckontax replied 1 year ago.
As your land is below the permitted area (about half a hectare) Private Residence Relief (PRR) applies to the whole site so there are no taxes due on your conversion. PRR relieves any capital gain at 100%. Your tax office clearly is unaware of the Capital Gains Tax rules, not an unusual occurrence.
Customer: replied 1 year ago.
so with your answer, to confirm we will not be liable to any capital gains tax or any income tax upon sale of the newly formed semi detached property, and by us remaining in the existing portion of the property
Expert:  bigduckontax replied 1 year ago.
You will not be liable to any Capital Gains Tax as the overall site is below half a hectare and so PRR applies. No Income Tax is levied on capital sales, only on rentals derived from ownership ie if you let it out.
Customer: replied 1 year ago.
thank you for your assistance
Expert:  bigduckontax replied 1 year ago.
Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.