Planning to build a house on Plot

[kathryn100]

We have owned a building plot for 18 months which cost £45,000 now worth £120,000. We didn't buy it to live there but because it seemed a good investment. Now we can't afford to sell it because of the tax angle. If we build a house on it and make it our primary residence and keep our original home unrented how long would we have to wait before we could sell it free of capital gains. Is this possible?

[Ian McTernan CTA]

I have a little trouble understanding how as the price has increased by 75K you 'can't afford' to sell it- I think what you mean is you have made a profit and don't want to face the tax bill on those profits.

What you suggest is possible but must be done in the right order- build new home, live in it and rent out the old one, then after 12 months or so move back to the old one and sell the new one. PPR should be available and no CGT to pay.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com