Tax on New House built in my garden

[chris.flanagan@scott]

I would like to know what the tax position is for building a new house in my garden which I intend to sell as soon after building as is possible with the minumum amount of tax payable.

I am guessing at a profit of between £70k and £100k and I am a higher tax earner.

I think that CGT is payable - so would living in the new home for a year once it is complete(as my primary residence) and selling or renting my current house avoid the tax? If I then sell the new house after a year, would I avoid the tax?

I would appreciate whatever advice you might have on how best to manage this whilst minimising tax.

Regards
Chris

[demetris]

I believe you will be able to avoid CGT completely when you sell the second home if you make an election to nominate the second house as your PPR within two years from building it.

you can shortly afterwards reverse the election and move into the new home to ensure minimum period of non-PPR for the first house.

Demetris Savva BA FCCa
http://www.tax-accounting-london.info
constantinesavva@accamail.com

[chris.flanagan@scott]

I do not really understand your final sentence Demetris. Can you expand a little on this please.

Appreciated

[demetris]

Once you make an election to nominate a second property and you move in it for a while, the last three years of ownership are exempt.

But, in the period you live in that second property the gain on a future sale of your first home will not be exempt. so, keep it short.

I hope this clarifies.

Demetris Savva
http://www.tax-accounting-london.info
constantinesavva@accamail.com

[Neale]

In my view this is not clear cut. See the attached from the Revenue. Critically it refers to exclusions where you spend money on your dwelling house (I presume to include gardens), wholly or partly to realise gain on it's disposal. It also seems conceivable you may be taxed as income as a trade. Advice seems essential.
http://www.inlandrevenue.gov.uk/pdfs/20 ... /ir283.pdf refers