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Buachaill, Barrister
Category: Law
Satisfied Customers: 10976
Experience:  Barrister 17 years experience
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I have signed a contract sale of my home to x.He put

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I have signed a contract for the sale of my home to x.He put in the contract tha I can be required to transfer to more than one person. We are approaching completion and he requires me to transfer part to a neighbour fo £120,000 ( the total price is £2,6m and the total plot is more than 1.2 acres. Will I be liable for cgt on the part sold to a third party even though the contract for sale of my home ( which I have lived in for 20 years) is to one person for one price?
1. Under the law in England & Wales, a sharp distinction is drawn between the contract for the sale of a house and its curtilage and the conveyance. The contract is what determines what is being sold. The conveyance merely determines to who it is conveyed. Accordingly, here, the contract determines what is being sold. So you are selling the dwelling house and its curtilage as one entity. Any taxable gain which will arise for Capital Gains Tax would be determined by this contract for sale as this is where the taxable gain arises, not upon the conveyance. Accordingly, the computation of any gain for CGT is determined by the contract and not by dividing up the different parts into pieces which are then transferred to different people.
2. The key issue from a CGT point of view is whether all of the 1.2 acres forms part of the curtilage of your house so that it attracts principal private residence relief from CGT. This is determined by the definition of curtilage in the Oxford Shorter Dictionary which was quoted in the leading case “a small court, yard, or piece of ground, attached to a dwelling house and forming one enclosure with it". Accordingly, so long as the 1.2 acres forms one entity with your house and has been used as such, then it all qualifies for principal private residence relief. It makes no difference that the purchaser is dividing the curtilage of your house, subsequently, into pieces.
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