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bigduckontax, Accountant
Category: Tax
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My wife and I have purchased an old bungalow on a large plot

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My wife and I have purchased an old bungalow on a large plot and have gained planning permission to build two homes on it. One for us to live in and the other to either sell the plot, or work with a builder to construct it an sell it on. The proceeds of the sale will be used to fund the cost of our build.
Could you advise on what would be the most tax efficient way to progress with the second plot. If we sell the land to the builder will we pay capital gains tax and at what rate?
The bungalow cost £315,000 and the second plot is now probably worth £225-£250K.
Also, if we did build the second home, what value do we put on the cost of the land?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Before I can address this question I need to know the size of the 'large plot' upon which the old bungalow is located.
bigduckontax and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.
The overall plot size is 90ft wide and 150ft deep. The development plot is roughly 50% of the total area.We originally intended updating the bungalow, but it was in too bad a condition to make that viable, so we have been renting since we purchased it in October 2014 and went for planning permission for two new builds instead. Last night I read on the HMRC Private Residence Relief guide that if you are living somewhere else because refurbishment, or building work is going on that you can still nominate the site as your main residence provided you do it with 24 months of purchase - Oct 2014 in our case. How exactly do you do that, just write to the HMRC?We are thinking that developing the site using a builder will be the best outcome, but that depends on what value the land for the development plot is valued at for tax purposes. The current market value with planning permission would be £225-£250k. If I was to transfer the development plot to just being in my wife's name rather than both of us (as she is a low rate tax payer, would we be able to transfer it at current market value, or would we have to use an equitable split of the original purchase price of £315,000?ThanksJes
Customer: replied 1 year ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 1 year ago.
My number is ***** 766943Thanks,Jes
The question has been answered fully in the telephone call. Thank you for your support.