I own a farmhouse which sits in .8 of an acre to ther front (and off to one side) of the house is a semi deralict cottage for which I have reently aquired full PP, if I sell off the front have of my garden on which the cottage stands (ammounting to about .3 of an acre) will I be liable for Capital gains tax.
Does any one Know if the tax office (uk) will answer annonimouse quiries over the phone and if so what department.
If this farmhouse is where you live and always have lived during your entire ownership of it, then no. If it has never been your home, then yes, depending on how much gain there is. Otherwise, maybe.
Ask them for leaflet IR283.
Does it not also depend on how large the whole plot is? If it is larger than some defined value then the land is not considered to be part of the garden and so does not benefit from PRR. The IR leaflet will tell you.
Robert
The leaflet tells you that this "defined value" is half a hectare, which is a bit more than an acre. At only 0.8 acre, he's well withing the limit.
Actually IIRC it can be more if the excess is 'in keeping' with the house or some such. E.g your 26 bedroom Georgian mansion can sell with
10 acres free from CGT. Your 2 Bed urban semi can't.
Yes, that's right, but then your 2 bed urban semi isn't likely to have
10 acres with it, is it? Makes you wonder what the point of this restriction is. After all, how many and what sort of houses sit in grounds which are bigger than what's "in keeping"?Worse, if you did have a modest urban dwelling in very generous grounds, say of twice the limit, how would you assess the capital gain on the land, as opposed to that on the whole property?
Say you had a nice 8-room detached house in 2 acres, which you bought for 200k 10 years ago and which would now be worth 500k. How do you determine how to apportion the 300k gain between the house and the grounds, and thus how much of the gain is to be attributed to the land being sold? Would it simply be by considering that the gain factor of the whole property was 2.5 and that therefore, if the land is being sold for 100k, then this figure must include a gain of 60k?
Also, if the area is above the limit, do you still get exemption on what would have been the limit? I.e. if the limit is taken to be
1.1 acres, but the whole area is actually 2 acres, is 45% of the gain taxable, or 100%?
One example might be where a speculator buys a building plot and adds it to their house deeds so that they can avoid CGT when they sell it off later. the rule prevents this kind of tax dodge, rightly in my view.
Robert
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