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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I built a new house in the garden of a house that I own. Can

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I built a new house in the garden of a house that I own. Can I include the value of the land when calculating the cost of the build so as to reduce the profit and hence income tax payable?

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

HI

Yes you can include the cost of the land, and the cost to build when calculating the capital gain position (also the costs to sell such as legal fees and estate agents)

Thanks

Sam

Customer: replied 3 months ago.
Hi Sam,
I understood that a property newly built and then sold on was considered ‘trading’ and as such subject to income tax and not capital gains tax?
As the dwelling was built in an existing garden there was no sale of the land and therefore no cost. My question was can a value be placed on the land to be used in the calculation of overall cost of the construction of the dwelling in order to minimise the (income) tax payable. How would the land be valued?
Thanks

HI

Its only trade if you do this as a business anyway or plan to do this again in the near future, other wise its just capital gains tax

It was up to you to get a value for the land prior to the build commencing and if you failed to do this then you would need to get 2-3 estate agents to value the land post build - and use the average of both/three figures

Thanks

Sam

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