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Where Taxpayers and Advisers Meet

Capital gains on Land Sale

Italiahorse
Posts:4
Joined:Mon Oct 02, 2017 10:00 am
Capital gains on Land Sale

Postby Italiahorse » Tue Oct 03, 2017 7:33 pm

We purchased a plot of land in 1987 for £2,200 which we still use to keep our horses on.
In 2005 the Ricoh Arena was built nearby and we can also use the field up to 26 times a year as a car park.
The income from this is around £15,000 (after tax) a year and is run via the Ricoh parking official offsite.

I have been approached with an option to sell the land should planning permission be obtained for a minimum value of £275K with potential market value at £350K.

If it comes off we will be selling our property and buying another with more land.

Is there an opportunity to decrease Capital gains and what Capital Gains do people think I am liable to ?
I would like to see whether the long term income is better than selling the land before I commit to the option.

Any help would be appreciated.

Italiahorse
Posts:4
Joined:Mon Oct 02, 2017 10:00 am

Re: Capital gains on Land Sale

Postby Italiahorse » Wed Oct 04, 2017 11:07 am

Just to add this field is not attached to our existing property/business.
We own our existing property which is adjacent to a larger field we rent to run our riding school/ livery business.

The Ivy Office Ltd
Posts:333
Joined:Wed Aug 06, 2008 3:44 pm

Re: Capital gains on Land Sale

Postby The Ivy Office Ltd » Wed Oct 04, 2017 12:13 pm

As this looks like an investment in land and not business related there is not much manoeuvre to defer the gain by rolling it over into an existing or new business adventure.

The first 11,300 of profit is tax free for each individual if you are a higher rate tax payer already then the balance is taxed at 20%. So for sale proceeds of £350k tax is £67,300 (350000-2200-11300 *.20).

The tax may be slightly lower if the property is held in joint names or some if you are a basic rate taxpayer. There a too many combinations to provided an exact figure without further details.

If you are married then it advisable to place the property in joint names before the sale as this will reduce the tax by £2320 in above example

Please email if you need further help

dennis@taxesclear.co.uk

Italiahorse
Posts:4
Joined:Mon Oct 02, 2017 10:00 am

Re: Capital gains on Land Sale

Postby Italiahorse » Wed Oct 04, 2017 1:37 pm

The properties (Field and House) are jointly owned by my wife and I.
The business uses the field for horses used in my wife's sole trader business which now includes the income from parking.
We are both lower rate tax payers.
I am retired but do work in the business voluntarily.

Just seeing if there are any opportunities to use the money from the field to develop the riding school/livery business by selling both the house and the field so we can buy a property/land we can develop. Current rented riding school/livery facilities are a little Heath Robinson but cannot be invested in because we don't own the land the riding school/ livery yard is situated in.

Italiahorse
Posts:4
Joined:Mon Oct 02, 2017 10:00 am

Re: Capital gains on Land Sale

Postby Italiahorse » Wed Oct 04, 2017 1:38 pm

Thanks for your initial reply.


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