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Sam, Accountant
Category: Tax
Satisfied Customers: 14155
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I purchased an investment property in 2013/14 with a partner.

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I purchased an investment property in 2013/14 with a partner. We split off half the land, registered the new land parcel and sold the existing house and its remaining garden for the price we originally paid all in 2013/14. Net of purchase and sale costs and the cost of splitting the land there would have been a loss of about £5k.
My partner and I then each transferred a portion of the vacant land to our spouses. We used our own expertise and technical professional services to obtain planning permission and building regs for a house on the land. We are now selling the land for £85k in 2014/15.
In calculating the cost of the property sold in 2013 can I attribute some of the value to the land retained so I can reduce the gain in 2014. If so, do I have to get approval from HMRC for the notional value I'm using?
Thanks for your question. I am Sam and I am one of the UK tax experts here on just Answer.
I am afraid the answer is no, as the value of the land retained will be offset against the gain considered in 2014/2015, as it elates to the plot on which planning permission has been obtained.
But you can split down the initial purchase price so that the you have the correct value for the house purchase and the land sold with it, then then a separate figure for the land separated off.
Ideally you should have got estimates to establish what value was attributable to each at the start of this venture, but your local estate agents should be able to provide a valuation pre building/planning permission.
Similarly the costs to buy (legal fees) should also be split to represent the % for each element of the purchase.
Let m know if you have any follow up questions on the information I have provided
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