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Sam, Accountant
Category: Tax
Satisfied Customers: 7510
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi Sam,I bought a property in Dec 2007 for £250k and as

Customer Question

Hi Sam, I bought a property in Dec 2007 for £250k and as agreed as part of the sale, then rented it straight back to the Owners. They moved out in Nov 2010 and we then moved into the property as our primary residence in Dec 2010 until March 2012. The property was a double storey 2 bed house with an adjoining single storey 2 bed annex (both with their own bathrooms, kitchens, reception rooms and independent front doors and entrances) and a small adjoining garden (way under 0.5 hectare in size) After we moved out I converted the main house (that prior to conversion was valued at £300k) into 2 x 1 bed flats (Ground and 1st floor) and the single storey annex into a 1 bed flat – all from within the existing footprint of the original house. The cost of this conversion was £80k. (I did then ‘new build’ a further 1 bed flat over the 1 bed flat that was formerly the annex.) From Dec 2012 to Dec 2013 the 3 flats I want to sell were rented for £775pcm, £750pcm and £600pcm. I have now received an offer for the adjoining garden on which I did secure planning permission, for the sum of £92.5k – but have not exchanged yet and the 3 flats I created out of the original dwelling are on the market for £150k, £170k and 130k. I intend to retain the last flat that I built new. Following my enquiry to HMRC about a year ago, a Tax Inspector did phone me and advise that although he could not give me a definitive answer, his opinion was that I could sell the land and the 3 flats with full PPR as they all formed a part of what was my private residence. My private research thereafter however, appears to contradict this advice and as you will appreciate, I cannot afford to make any mistakes!! So my questions are as follows ; 1.) Can I sell the adjoining garden now and enjoy full PPR? If not, how would I calculate any CGT due to HMRC? 2.) Can I sell the 3 x flats and enjoy full PPR? If not, how would I calculate any CGT due to HMRC (I do believe if I am not entitled to full PPR, that I would be entitled to, in addition to some other relief, to also claim some letting relief?) Thank You Tim XXXXX

Submitted: 3 years ago.
Category: Tax