Buying a property & selling bits off....
Discussion
Hi all,
Very quick one,
We are hopefully buying a modest farm house with some stables and land....
Should hopefully be able to get planning to turn the stables into residential (half of them already are...) and then the idea would be to sell them off with planning to fund the renovation of the main property.
Say for easy numbers-sake we sold the Barns with planning for £150k, what is the best way to structure such a sale and what kind of tax/capital gains implications are there? (e.g. if i did a minimal amount of work and then sold it would that help? such as running water etc)
I just have no idea, however i'd like to understand ideally what i can bank on taking out of it to plan ahead around the main property...
e.g. Sell for 150k, get 100k in bank or what ever that looks like....
(For reference i'm a PAYE man who has to do a self assessment so not sure if there are implications there in terms of declaration of income etc?)
Many thanks
Chris
Very quick one,
We are hopefully buying a modest farm house with some stables and land....
Should hopefully be able to get planning to turn the stables into residential (half of them already are...) and then the idea would be to sell them off with planning to fund the renovation of the main property.
Say for easy numbers-sake we sold the Barns with planning for £150k, what is the best way to structure such a sale and what kind of tax/capital gains implications are there? (e.g. if i did a minimal amount of work and then sold it would that help? such as running water etc)
I just have no idea, however i'd like to understand ideally what i can bank on taking out of it to plan ahead around the main property...
e.g. Sell for 150k, get 100k in bank or what ever that looks like....
(For reference i'm a PAYE man who has to do a self assessment so not sure if there are implications there in terms of declaration of income etc?)
Many thanks
Chris
All I would say is make sure (if you have one) that your mortgage company aren't going to charge someting crazy each time you change what is their security, if they have to re value each time you sell a chunk it will start to add up.
It may help to have a value for each chunk pre planning so that there are no arguments as to the uplift in value once planning is granted. I'm hoping you can offset the reduction of the value of the remaining part of the property
so if farm including barn No1 with no planning is worth £600k, having sold off barn No 1 if the farm is now worth only £500k and you have sold barn No1 for £150k I suppose you are only in profit by £50k less costs rather than showing a £150k profit.
I'm much too stupid to understand these things, get a decent accountant onside BEFORE you do anything
It may help to have a value for each chunk pre planning so that there are no arguments as to the uplift in value once planning is granted. I'm hoping you can offset the reduction of the value of the remaining part of the property
so if farm including barn No1 with no planning is worth £600k, having sold off barn No 1 if the farm is now worth only £500k and you have sold barn No1 for £150k I suppose you are only in profit by £50k less costs rather than showing a £150k profit.
I'm much too stupid to understand these things, get a decent accountant onside BEFORE you do anything
https://www.gov.uk/government/publications/land-an...
This link may help; before you speak to an accountant.
This link may help; before you speak to an accountant.
Nothing is ever guaranteed. I would certainly take steps to find out what type of approach the local authority has to such change of use planning applications BEFORE you invest a large amount of money.
I've seen what can happen when someone assumes planning will be forthcoming - and then planing is refused.
I've seen what can happen when someone assumes planning will be forthcoming - and then planing is refused.
Chr1sch said:
Yes that is very true, we are buying it anyway but the real value to us would be to sell the barns as a security blanket and use some cash to invest but equally put some in the bank (hence the questions about what the financial bit would look like)
There are two things you need BEFORE you get into this,- A decent solicitor, and
- A decent accountant.
Might be easier to rent the units rather than sell them? If this is your main house move in life then retaining some form of control over who lives right next door to you would be beneficial. Might also make sense from a tax perspective as well as debt one and give a pension income later in life?
You're going to be sticking these properties into leases anyway so as to retain some control over what residents can and can't do: no leaf blowers at weekends, exterior must be decorated every X years, shared access maintenance costs etc. I think I'd prefer to just retain ownership and rent them. Depending where the property is located then the holiday rental market at the moment can give some great yields and gives you even more control over what type of human is on your land.
You're going to be sticking these properties into leases anyway so as to retain some control over what residents can and can't do: no leaf blowers at weekends, exterior must be decorated every X years, shared access maintenance costs etc. I think I'd prefer to just retain ownership and rent them. Depending where the property is located then the holiday rental market at the moment can give some great yields and gives you even more control over what type of human is on your land.
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