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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I would like to split/separate our detached family home into

Customer Question

I would like to split/separate our detached family home into two properties and sell one or both. It is a barn and we purchased (for £57k) and converted two thirds of it into a house in 1995 , finishing off the last third of the building in a second phase in 2004. The conversion cost about £300k over all those years so we don't have a firm purchase price at a given date.
It has been my wife and I only home since 1995, we are both in our late 40's. Today its valued at £850k as a whole but £1.1m (£700k and £400k) as split with building work conversion costs of just £45k. I have read a lot on the subject now but would like to see an informed opinion of the capital gains calculation that would apply to us if we sold the smaller one of the properties(valued at £400k)
Submitted: 9 months ago.
Category: Tax
Expert:  bigduckontax replied 9 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Pleas advise the total site area occupied by your property and garden. Once I know this I will be in a position to assist you further.

Customer: replied 9 months ago.
Hi Keith, The overall plot is about a quarter of an acre so I believe that is about 1000 square meters.
Expert:  bigduckontax replied 9 months ago.

Provided that plot is below half a hectare. and a quarter of an acre is well below this, any sales of all or part of the plot would attract Private Residence Relief (PRR). PRR relieves Capital Gains Tax (CGT) at 100% so thre would be no CGT to pay.

I do hope that you have found my reply of assistance.

Customer: replied 9 months ago.
Did the rules change as I read a lot about the new/second property value increase being subject to CGT, or is all of that trumped by the half a hectare? Would you be able to point me in the direction of the relevant HMRC documentation for the half hectare PRR relief.
Expert:  bigduckontax replied 9 months ago.

Have a look at HMRC Helpsheet 283 which you can find here:

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet

You will need a wet towel round your bead and the backs of lots of used envelopes to assist!

I would not worry though as your overall plot is within the 'permitted area.'

Customer: replied 9 months ago.
OK, that's great..thank you
Expert:  bigduckontax replied 9 months ago.

Delighted to have been of assistance.

Please be so kind as to rate me before you leave the Just Answer site.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3384
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 9 months ago.

Thank you for your support.

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