I am hoping someone could help me with the following query:
I bought a property with a single house on it 6 years ago. I then passed planning permission to demolish this house and replace it with 2 detached houses.
3 years ago I built one of the planned houses and currently live in it. The entire plot size is 0.25 acres and the second new build plot to the side of the current new build was grassed over and used as a garden.
I now plan to build the second home on this plot. My current two options are:
1) To build the new build in my name and sell it on, with the profit (sale price – (build cost + land cost)) subject to income tax.
2) Open an SPV and transfer the land from myself into the SPV (stamp duty will be paid I believe) and deal with profit through corporation tax / entrepreneurs relief etc.
My questions are:
• How would I work out the cost of the land? The current market value of the plot as valued by a RICS surveyor?
• Would there be any CGT on this land value in 1 and/or 2 above? I understand under normal circumstance I would get PRR relief if I just built in the garden as my entire plot is small and the second new build plot has been used as a garden. But I am concerned that the fact I got initial planning permission for 2 new builds at the same time and have only lived in the one for 3 years it may be deemed otherwise.
Is there anything else to look out for that I have missed?
Thanks!
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