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Where Taxpayers and Advisers Meet

Cellar conversion (new property) private residence

Posts: 1
Joined: Thu Jun 06, 2019 9:28 am

Cellar conversion (new property) private residence

Postby Derektimms00 » Thu Jun 06, 2019 9:48 am


I would be grateful for your advise.

I own a leasehold flat including a cellar which is my personal residence since July 2017.

I plan to convert part of the cellar into a 1 bedroom flat. I would surrender my existing lease allowing formation of two new leases , 1 which will remain my private residence and the other (1 bed cellar flat) which would be sold.

I understand that the new lease for my private residence will not incur CGT, however for the new 1 bed cellar flat CGT on the gain will be applicable and calculated as below, is this the correct approach?

Existing flat
Bought £475k
Unconverted Value £650k
Refurbished costs £100k

1 Bed cellar flat
Bought £0k
Value £300k
Conversion costs £220k

CGT would be 75*/ 950k x 220k = £17k less annual allowance.


If you have any questions please let me know.

Kind regards,


Posts: 3168
Joined: Sat Feb 01, 2014 3:26 pm

Re: Cellar conversion (new property) private residence

Postby bd6759 » Thu Jun 06, 2019 11:16 pm

Building a house might be construed as a trading activity and liable to income tax, not CGT.

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