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Where Taxpayers and Advisers Meet

Can I sell my home to my business and avoid CGT

TaxBodger
Posts:4
Joined:Sun Mar 12, 2017 10:11 am
Can I sell my home to my business and avoid CGT

Postby TaxBodger » Sun Mar 12, 2017 10:49 am

Hi folks,

I'm new to the forum so hello!

I have a less than pretty house in a garden of around an acre that's our primary residence. There is a high likelihood that I'd get planning for several houses so I'm working through various options and it's here I'm looking for advice.

I'd like to stay in the area so rather than acquiring planning then selling the site as a whole to a developer where I wouldn't be liable for CGT, I'd like instead to build the houses myself and so still stay in the place that i like.

To gain from the uplift in value of the land without paying tax, can I in effect sell the land (or part of) to a business owned by myself that would do the building, and still avoid CGT?

Thanks,
G

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Can I sell my home to my business and avoid CGT

Postby SteLacca » Sun Mar 12, 2017 12:16 pm

No, the connected parties rule would kick in and it would be market value on the sale. However, you may be able to claim principal private residence relief on at least some of the sale (generally, half a hectare can be considered as a part of your PPR.

Don't get caught out by SDLT, though. The company would in all likelihood be liable to pay SDLT on the purchase.

TaxBodger
Posts:4
Joined:Sun Mar 12, 2017 10:11 am

Re: Can I sell my home to my business and avoid CGT

Postby TaxBodger » Sun Mar 12, 2017 2:05 pm

Thanks SteLacca, you've unfortunately confirmed my suspicions.

If I were to obtain planning and instead of building the houses myself, sell on the individual plots then this would be tax free?

Thanks,
G

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Can I sell my home to my business and avoid CGT

Postby bd6759 » Sun Mar 12, 2017 6:12 pm

You will pay income tax on the profits.

TaxBodger
Posts:4
Joined:Sun Mar 12, 2017 10:11 am

Re: Can I sell my home to my business and avoid CGT

Postby TaxBodger » Mon Mar 13, 2017 12:07 pm

Sorry bd6759, not sure I understand.

I'd pay income tax in relation to my first question or second? If it's the second, I thought it would be tax free as it's land from my primary residence?

Thanks,
G

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Can I sell my home to my business and avoid CGT

Postby SteLacca » Mon Mar 13, 2017 2:40 pm

If HMRC can show that the sale is by way of trade (which if you have obtained planning permission, subdivided the land into plots and then sold them, they could) then it is no longer a capital transaction, but is a transaction in the nature of trade and subject to income tax rather than capital gains tax.

TaxBodger
Posts:4
Joined:Sun Mar 12, 2017 10:11 am

Re: Can I sell my home to my business and avoid CGT

Postby TaxBodger » Mon Mar 13, 2017 3:01 pm

Cheers SteLacca. Unfortunately, it sounds like obtaining planning then selling as a whole is the answer.


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