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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 14872
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I would like to know that I am considering building a house

Customer Question

hi I would like to know that I am considering building a house in the extra piece of land in my garden and then resell it is this doable and would I be liable to pay for capital gains tax, if so how many percentage , and is it possible to sell it at a later stage to avoid the tax if it applies
JA: What are the assets or property for this capital gain?
Customer: what do you mean
JA: What confuses you?
Customer: I don't know what you mean by assets or property for this capital gain
JA: Anything else you want the Accountant to know before I connect you?
Customer: yes ,
Submitted: 16 days ago.
Category: Tax
Expert:  Sam replied 16 days ago.

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

Customer: replied 16 days ago.
hi
can you advise me on the above regarding the capital gains tax if I build and resell , and what the best way to avoid the tax
Expert:  Sam replied 16 days ago.

Hi

 

 

Can you advise how large is the total land in which the house sits in (that you live in) including this piece of land in which you plan to build in. I am afraid I cannot tell you how to avoid tax - just what your tax position will be - Thanks Sam

Customer: replied 16 days ago.
I don't want to have a live phone call
Expert:  Sam replied 16 days ago.

Thats fine but please answer the question re the total size of the land - thanks Sam

Customer: replied 16 days ago.
the land is approx 3000 sq mars
Customer: replied 16 days ago.
can you respond to my question please
Expert:  Sam replied 16 days ago.

Hi

 

Please note that it takes time to answer and you had answered in a new thread and I was getting a refund for you for that - the answer is thata s its less than 0.5 hectares (its 0.3) then to sell the land would allow this to be e4xempt as fully covered under the private residence relief rules. But as you plan to build on this yourself and thens ell - this creates an intent to make a profit so will be fully liable to capital gains tax. You therefore should get the land valued on which you plan to build, so you can then in due course deduct the cost of the lands value - along with the buildings costs and professional and legal fees from the sale price. Then the first £12000 exempt with any remaining gain liable to 18% or 28% tax depending on your annual income position - you should declare this sale through self assessment to HMRC the following 5th April after its sale. If you moved in and made it yout home and sold the original property both would be fully covered by private residence relief thereby avoiding capital gains - thanks Sam

 

Customer: replied 16 days ago.
if I move in the property for around a year , and then sell it , how much what I be liable to pay ?
Expert:  Sam replied 16 days ago.

 

 

Hi

 

As long as you move all aspects of you life into this new build and have sold the old house then you can avoid capital gains completely as the original house has the time you live there plus the last 18 months of ownership before a capital gain position would arise as the new build as long as built within 12 months and you move in and live all aspects of your life there (for any period of time but I do suggest at least a year before selling) then this too is fully covered by private residence relief as and when sold - thanks Sam

 

 

Hi

 

Expert:  Sam replied 14 days ago.

Can I asist further ? Thanks Sam