The scenario is as follows;
A retiring couple live in a high value property set in 9 acres, with a large mortgage and no repayment vehicle which needs to be paid off this year.
They intend to build a new property on one acre of that land and move into it and sell the existing property.
To do this they will need financing (most likely Equity Release, surprisingly). To get financing, they will need to secure against the existing property and that means that if they build the new house first and THEN carve out the title for the new property, the financing company with a charge on the property will very likely block them being able to do so.
That suggests that they should hive out the new plot first and then build on it. The worry there is that they would have a large Capital Gain on the new property since it's a difference title to their existing property. Or maybe they won't?
Of course to be safe, they'll need planning permission to actually hive off the new building BEFORE they start doing anything, to make sure they don't end up with 2 houses on one title that the council won't let them split. But then where does this leave them with CGT
So I suppose ultimately, the question is, how do we do this without getting clobbered for the CGT on the new build? it doesn't seem to fair to pay CGT on a self build main residence.
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