A Tax question.
A person owns 2 properties.
Property 1. The person lives in.
Property 2. The person owns a 1/2 share with another brother. This property consists a house sitting to the side of a 1/3 acre land. This allows for the separation of the property into a house with a plot of land and a plot of land that can be sold for development.
For TAX reasons is it better to sell the land for development first or the house first or is there little difference.
thanks
What are the estimated capital gains?
The house may sell for 320k The land for development 170k
The whole plot had a valuation of 220k at the death of its owner. There has been some renovation to the house, after death, to the value of 50k (roof and windows)
I can't see that there's a difference.
But if there is, it's going to be tiny in comparison to the loss of value due to reducing house prices. Remember the value of land is disproportionately affected by these falls. If it were me I would get shot of the land ASAP.
tim
other things to consider:
Was the whole of the deceased's IHT allowance used up? Was the death fairly recent? What about getting the probate valuation increased to the actual sale price of the house? the CGT will be based on the increase in value from probate value to sale price. but if the sale takes place within a year or 2 (?) you can retrospectively change the probate value to the actual sale value and reduce the captial gain to zero.
Alternatively, could the brothers move in to the house for a bit and claim it as their private residence to reduce the CGT bill. The last three years of their ownership would be subject to PRR even if they only live in it for a year.
Robert
other things to consider:
Was the whole of the deceased's IHT allowance used up? Was the death fairly recent? What about getting the probate valuation increased to the actual sale price of the house? the CGT will be based on the increase in value from probate value to sale price. but if the sale takes place within a year or 2 (?) you can retrospectively change the probate value to the actual sale value and reduce the captial gain to zero.
Alternatively, could the brothers move in to the house for a bit and claim it as their private residence to reduce the CGT bill. The last three years of their ownership would be subject to PRR even if they only live in it for a year.
Robert
thanks, but as for your statement about moving in together,
Um both brothers are aging also the property has no heating, kitchen, bathroom, toilet, ceilings. I fear both would pass away quickly. I also fear if they did not pass away from the lack of amenities it would be from murder. Best if they are kept 60 miles apart....emails are bad enough.
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