CG on sale of home.

[gjh1936]

My wife and I are in our 70's living alone in a large house/garden. We have built a small house at the bottom of the garden and want to sell our old house to our daughter and family. It is quite separate from the old house with own access. After saying it would be quite starightforward, our solicitor now wants to refer us to a third party for a consultation regarding potential Capital Gains!
Are we being conned in to more expense? We are sellinfg the house (albeit with a smaller garden) that we have lived in for nearly 30 years. Can anyone please give any advice as to what action we should take. Should I speak to the HMRC?
Worried!
gjh1936

[mullet]

I don't think you're being ripped off. A solicitor will have some idea about CGT (some more than, some less than others) but would not be unreasonable in wanting an opinion from someone appropriately experienced in CGT issues. In the same way that an accountant would (I hope!) refer relevant legal/contract issues to a solicitor etc.

There is little point in talking to HMRC. They don't (or shouldn't) give pre-transaction advice - they are mainly interested in people making complete and correct tax returns after a transaction. By this point it is almost always too late to do anything about addressing a problem.

On the face of it, you will probably not be exposed to CGT.

Old house: Your original house will be exempt if it has always been your only or main residence, as long as you dispose of it within 3 years of it ceasing to be your residence. You don't say so, but I guess that you are planning to move into the smaller house in the garden? As soon as the plot ceased to be garden of the old house (i.e. when it became a building site) then CGT exposure potentially began.

New house: But if the building only took up to 1 year, then that year can be treated as residence. Even if it took more than a year, then the longer you live in the new house the smaller the potential CGT burden becomes - and in any case it could be covered by your annual exemptions in the year of ultimate disposal. Sorry for talking about death (it's not very British), but if you plan to stay in the new house until you die then there won't be any CGT on disposal anyway (as the value of the house will be uplifted to market value on death). It's not quite as simple as that, but that's the basic idea.

There is only one potential sticking point - the overall size of the plot. Was it more than or less than half a hectare (about 1.25 acres)? If less than, then no problem. If more than, and if more than 0.5Ha is being sold to your daughter and family, then it is a little more complicated but not terrible.

[gjh1936]

Many thanks mullet,
we lived in the old house more than 25 years and the have just moved into the new one just under one year from the time the build started. The whole plot is less than half an acre! so each house will have a comparatively smaller garden.
Your parameters seem to fit in perfectly with our situation.
Thank You
gjh1936