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bigduckontax, Accountant
Category: Tax
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I purchased a property 15 years ago as our main residence

Customer Question

I purchased a property 15 years ago as our main residence it also had planning permission to convert the stables into a residential unit , which we did immediately and my mother in law has been living their ever since. I now want to sell the property but I am thinking of selling the converted stables separately . Would I be liable for any capital gain tax ?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I am of the opinion that you will. Here is the Gov UK's guidance on the matter: 'Where part of a holding of land is disposed of, it is necessary to apportion the allowable cost of the land, and any other allowable expenditure, between the land sold and the land retained in order to calculate the gain or loss arising. The statutory rules for doing this require a valuation of the land retained. In order to avoid the need for this, HMRC will usually accept an alternative basis of apportioning the expenditure. Under the alternative basis, the land disposed of is treated as a separate asset from the land retained and any fair and reasonable method of apportioning part of the allowable expenditure to it will be accepted. HMRC may insist on the statutory rules if not satisfied that the resulting apportionments are fair and reasonable' The costs of the conversion will be deductible from the gain which will be calculated using the price originally paid for the land, the building conversion costs and the disposal price. You do have your Annual Exempt Amount (AEA) of 11.1K to offset this gain. I am so sorry to have to rain on your parade.