Capital gains tax on selling garden
Discussion
Eric Mc said:
How big is your garden?
How big is the total ground area of your house and garden combined?
a good question.. and one of the things that's confusing me!How big is the total ground area of your house and garden combined?
whole plot is 1.5 acres. maybe if it were sperated the 'site' would be an acre or so.
i saw that thing about "the garden and area of grounds sold with it does not exceed 5,000 square metres (about one and a quarter acres) including the site of the house "
(so does this mean that for some reason i did sell the whole house i'd some how have to pay CGT?? - arggh!)
The general rule is that your home will be exempted from CGT up to and including half a hectare. So, if the boundaries of the land area being sold off is within that limit, the CGT exemption will still apply.
HMRC may want to examnine the circumstances around the sale e.g. how long you have lived in the house, whether there was an intention to sell the land at the time the property was originally bought etc.
HMRC may want to examnine the circumstances around the sale e.g. how long you have lived in the house, whether there was an intention to sell the land at the time the property was originally bought etc.
Eric Mc said:
The general rule is that your home will be exempted from CGT up to and including half a hectare. So, if the boundaries of the land area being sold off is within that limit, the CGT exemption will still apply.
HMRC may want to examnine the circumstances around the sale e.g. how long you have lived in the house, whether there was an intention to sell the land at the time the property was originally bought etc.
thank you.HMRC may want to examnine the circumstances around the sale e.g. how long you have lived in the house, whether there was an intention to sell the land at the time the property was originally bought etc.
what i don;t get is - say i lost my job and we had to sell.
what happens if i bought it for 250k last summer (made up number) and sold it for 300k. i have 'made' 20%. so do i have to pay 18% of that £50k? or do i only have to pay CGT on land over 1.25 acres (i.e. 0.25 acres) how is the value of the 0.25 acres established is this is the case?
(i knew there was a reason why we got it cheapish!)
Eric Mc said:
It's apportioned.
i am sorry to take your time but what do you mean:cap val increase = 20%
land is 1.5/1.25 of allowance so = 20% so tax of 18% payable on 20%
so it's 20%*20%*18%=0.72% of the original purchase price in this example?
if so not as bad as it could have been..
how long do i have to live there before no one cares? or is it always going to be the albatross..?!
briSk said:
Eric Mc said:
It's apportioned.
i am sorry to take your time but what do you mean:cap val increase = 20%
land is 1.5/1.25 of allowance so = 20% so tax of 18% payable on 20%
so it's 20%*20%*18%=0.72% of the original purchase price in this example?
if so not as bad as it could have been..
how long do i have to live there before no one cares? or is it always going to be the albatross..?!
My fees are reasonable
On the point of "how long do you need to have lived in the house", the answer is that tax law is completely silent on that.
Generally, determining whether a house is your "Main Residence" is easy - it's the house you are living in. Matters get complicated if you own two or more properties and you have lived in two or more of these properties at different (or even the same) time periods.
I presume you only have the one property and/or you only live in that one property at the moment?
briSk said:
Eric Mc said:
It's apportioned.
i am sorry to take your time but what do you mean:cap val increase = 20%
land is 1.5/1.25 of allowance so = 20% so tax of 18% payable on 20%
so it's 20%*20%*18%=0.72% of the original purchase price in this example?
if so not as bad as it could have been..
how long do i have to live there before no one cares? or is it always going to be the albatross..?!
Eric Mc said:
I'm not going to sit down and do your CGT calculations for you.
My fees are reasonable
i don't want you to waste your time either! have i correctly interpreted the word 'apportioned' though - as in:My fees are reasonable
i have 1.5acres/1.25 acres = 20% too much land so i have to pay cgt on 20% of my property? this is the clarifcation i would need.
so it would be 20% of property * %CapGain (say 20%) * rate of CGT (18%) so in this example it's 20%*20%*18% = 0.72% of original value of property?
Eric Mc said:
On the point of "how long do you need to have lived in the house", the answer is that tax law is completely silent on that.
Generally, determining whether a house is your "Main Residence" is easy - it's the house you are living in. Matters get complicated if you own two or more properties and you have lived in two or more of these properties at different (or even the same) time periods.
okay with youGenerally, determining whether a house is your "Main Residence" is easy - it's the house you are living in. Matters get complicated if you own two or more properties and you have lived in two or more of these properties at different (or even the same) time periods.
Eric Mc said:
I presume you only have the one property and/or you only live in that one property at the moment?
correctamundo__
thanks it is appreciated!
Edited by briSk on Friday 26th February 13:34
Edited by briSk on Friday 26th February 13:35
The way I would interpret their guidance on this is as follows. I am going to ignore your figures as my brain is not big enough to assimilate your numbers
House and Land - 2 acres
House and Land bought for £200,000 - Sold For £250,000. Gain £50,000.
Gain included in CGT Main Residence Exemption - £50,.000 x 1.25/2 = £31,250.
Chargeable Gain - £50,000 - £31,250 = £18,750.
Taxable gain - £18,750 less Personal Capital Gains Tax allowance of £10,100 = £8,650.
Tax payable £1,557 (£8,650 x 18%)
If the property is jointly owned, two personal allowances of £10,100 each can be applied to the gain. In this example, this would eleminate the gain completely and no tax would be paid.
If you only sold a part of the garden, the gain arising would be apportioned to take into the computation that part of the 2 acre plot which has been sold off that falls outside the 1.25 acre exemption zone.
House and Land - 2 acres
House and Land bought for £200,000 - Sold For £250,000. Gain £50,000.
Gain included in CGT Main Residence Exemption - £50,.000 x 1.25/2 = £31,250.
Chargeable Gain - £50,000 - £31,250 = £18,750.
Taxable gain - £18,750 less Personal Capital Gains Tax allowance of £10,100 = £8,650.
Tax payable £1,557 (£8,650 x 18%)
If the property is jointly owned, two personal allowances of £10,100 each can be applied to the gain. In this example, this would eleminate the gain completely and no tax would be paid.
If you only sold a part of the garden, the gain arising would be apportioned to take into the computation that part of the 2 acre plot which has been sold off that falls outside the 1.25 acre exemption zone.
Edited by Eric Mc on Friday 26th February 13:47
Eric Mc said:
The way I would interpret their guidance on this is as follows. I am going to ignore your figures as my brain is not big enough to assimilate your numbers
House and Land - 2 acres
House and Land bought for £200,000 - Sold For £250,000. Gain £50,000.
Gain included in CGT Main Residence Exemption - £50,.000 x 1.25/2 = £31,250.
Chargeable Gain - £50,000 - £31,250 = £18,750.
Taxable gain - £18,750 less Personal Capital Gains Tax allowance of £10,100 = £8,650.
Tax payable £1,557 (£8,650 x 18%)
If the property is jointly owned, two personal allowances of £10,100 each can be applied to the gain. In this example, this would eleminate the gain completely and no tax would be paid.
If you only sold a part of the garden, the gain arising would be apportioned to take into the computation that part of the 2 acre plot which has been sold off that falls outside the 1.25 acre exemption zone.
brill i had interpreted it correctly. apart from the fact that i had forgotten the cgt allowance! House and Land - 2 acres
House and Land bought for £200,000 - Sold For £250,000. Gain £50,000.
Gain included in CGT Main Residence Exemption - £50,.000 x 1.25/2 = £31,250.
Chargeable Gain - £50,000 - £31,250 = £18,750.
Taxable gain - £18,750 less Personal Capital Gains Tax allowance of £10,100 = £8,650.
Tax payable £1,557 (£8,650 x 18%)
If the property is jointly owned, two personal allowances of £10,100 each can be applied to the gain. In this example, this would eleminate the gain completely and no tax would be paid.
If you only sold a part of the garden, the gain arising would be apportioned to take into the computation that part of the 2 acre plot which has been sold off that falls outside the 1.25 acre exemption zone.
Edited by Eric Mc on Friday 26th February 13:47
thanks very much.
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