Building in the garden - CGT implications

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You are correct. What you have to balance is the extra CGT against what you might make if you took the other options. You might make more from option C but you would have all the work involved in getting the houses built and sold. My choice would be option A.

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Only on the that part of the total that represents the market value of the land that you have sold. The increase in value of a house over its building costs will be taxed as income (because that is exactly what it is).

tim

This is interesting Ger, whaen you say "1 or 2 houses" are you submitting two sets of plans? Or are you asking for a vague "outline" of the sorts of planning permission which *might* be approved?

Still in the informal stages - I will be trying for two, but may end up having to compromise - perhaps at the appeal stage. All depends on the attitude of the town planners and if turned down the reasons for not granting.

Ger

I understand that whether the sold part of the your garden gets PPR depends partly on how big the plot is. IIRC up to 0.2 hectare is OK, or was it 0.5 hectare?

Robert

"Robert" wrote

I think it's 0.5 hectare - just over one acre.

The (up to) 0.5 hectare is automatic (while it remains the "permitted area") under section 222 TCGA 1992.

A larger area may be exempt, if required for the reasonable enjoyment of the property.

"Doug Ramage" wrote

Quick question - does this include the land on which the actual building stands, or is a further 0.5h automatically allowed *outside* the house?

Not that it should make much difference. If the area of the house is a significant enough fraction of an acre, it'll be somewhat of a manor, in which case the permitted area of garden ground will be likely to exceed the automatic acre.

"Timothy Lee" wrote

It doesn't really matter how small the house is, if the land area is close to the limit for CGT exemption. I can imagine a scenario with land size 0.05 acres over the limit and house covering 0.10 acres; so the question was valid!