Hi
I'd be grateful for any feedback on my situation please.
I have a couple of properties that I have owned for a few years, bought as investment rental properties of which I pay tax on the rental income.
I've been lucky enough to get planning permission to build an attached house at one property and a detached house at another property.
Essentially I have 2 questions, I've tried to research the subject as much as possible and I believe my situation falls into a potential grey area
Option 1 would be to simply sell the 'side garden' of both properties. seemingly fairly straighforward, however my concern would be that HMRC could consider selling the gardens as a trade hence attracting Income Tax and Ni rather than CGT? (CGT would be distinctly more preferable in my situation). would the time between getting the planning approval and the date of sale of the land have any significance? ( I would keep and continue to rent out the existing houses )
Option2 is to build both new houses and rent them out for the foreseeable future, and also keep the existing houses. so i end up with 4 houses all rented out. If i then sold all 4 in 5 yrs time would this simply attract CGT at point of sale ? assume all sold in same tax year and assume house purchase costs of £400k, building costs £300k, all sold for £250k each. so overall cost is £700k, total sales of £1m. so CGT on £300k, I realise i have a CGT exempt amount of c£11k so CGT on £289k?
Any comments / suggestions greatly received
thankyou
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