Capital gains tax question.
Discussion
My mother has sold her garden with planning permission recently, nobody seems to be able to give her a clear answered on water or not she has to pay CGT. She inherited the house 6 years ago, took out a mortgage against the property for £35k which has been paid off using some of the money from the sale. The property was worth £285K, she sold the lend for £160K. She has no plans to move out of the house. Any advice would be most welcome.
Ian
Ian
Hmmm. Not really the sort of question where you/she want to be relying on an internet car forum!
Sale of part of main residence is generally exempt from CGT, but the best thing is to have a look at this HMRC helpsheet which spells it all out. Or engage a proper accountant.
https://www.gov.uk/government/uploads/system/uploa...
Sale of part of main residence is generally exempt from CGT, but the best thing is to have a look at this HMRC helpsheet which spells it all out. Or engage a proper accountant.
https://www.gov.uk/government/uploads/system/uploa...
Per HMRC -
1. Private Residence Relief
You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:
you have one home and you’ve lived in it as your main home for all the time you’ve owned it
you haven’t let part of it out - this doesn’t include having a single lodger
you haven’t used part of it for business only
the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
you didn’t buy it just to make a gain
You don’t need to do anything. You’ll automatically get a tax relief called Private Residence Relief.
Also explained elsewhere -
You sell part of your garden and your total plot is over half a hectare (1.2 acres)
So, the key point is what land area is covered by the house and garden.
1. Private Residence Relief
You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:
you have one home and you’ve lived in it as your main home for all the time you’ve owned it
you haven’t let part of it out - this doesn’t include having a single lodger
you haven’t used part of it for business only
the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
you didn’t buy it just to make a gain
You don’t need to do anything. You’ll automatically get a tax relief called Private Residence Relief.
Also explained elsewhere -
You sell part of your garden and your total plot is over half a hectare (1.2 acres)
So, the key point is what land area is covered by the house and garden.
PPR relief is available on the sale of a main residence, and:
TCGA 1992 S222(1)(b) land which he has for his own occupation and enjoyment with that residence as its garden or grounds up the permitted area.
Permitted area is the lower of 0.5 hectares or whatever area is required for the reasonable enjoyment of the dwelling-house as a residence, having regard to the size and character of the dwelling-house.
So if it's a garden, and less than 0.5 hectares, PPR should be available as long as it is on the whole house. If it is a very large garden/grounds, there might be some doubt. I think it's down to a District Valuer to determine whether areas larger than 0.5 hectares are within a permitted area.
TCGA 1992 S222(1)(b) land which he has for his own occupation and enjoyment with that residence as its garden or grounds up the permitted area.
Permitted area is the lower of 0.5 hectares or whatever area is required for the reasonable enjoyment of the dwelling-house as a residence, having regard to the size and character of the dwelling-house.
So if it's a garden, and less than 0.5 hectares, PPR should be available as long as it is on the whole house. If it is a very large garden/grounds, there might be some doubt. I think it's down to a District Valuer to determine whether areas larger than 0.5 hectares are within a permitted area.
Gassing Station | Finance | Top of Page | What's New | My Stuff