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Where Taxpayers and Advisers Meet

Where does CGT Liability lie??

Wilfred
Posts:2
Joined:Thu May 23, 2024 11:17 am
Where does CGT Liability lie??

Postby Wilfred » Thu May 23, 2024 11:26 am

Hi Everyone, just signed up.

I have a building plot attached to my existing house which is my primary residence. I believe that I could sell or develop this plot without incurring CGT because it is part of my PPR. However If I sold the existing house first to raise the funds to develop the plot, would this trigger a CGT charge, and if so when would it be liable to be paid?

Would this situation also trigger a CGT charge on the development or not?

Thanks

Jholm
Posts:386
Joined:Mon Mar 11, 2019 4:22 pm

Re: Where does CGT Liability lie??

Postby Jholm » Fri May 24, 2024 2:19 pm

Not sure on the layout or size of the land but it's possible that HMRC won't consider the plot as eligible for PRR unlike the residence itself.

See below for some guidance on which you can make your own assessment:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64818#:~:text=S222(3)%20TCGA92%20reads%20as,shall%20be%20the%20permitted%20area.

AGoodman
Posts:1777
Joined:Fri May 16, 2014 3:47 pm

Re: Where does CGT Liability lie??

Postby AGoodman » Fri May 24, 2024 3:04 pm

I have a building plot attached to my existing house which is my primary residence. I believe that I could sell or develop this plot without incurring CGT because it is part of my PPR. Okay

However If I sold the existing house first to raise the funds to develop the plot, would this trigger a CGT charge, and if so when would it be liable to be paid? No, because you are selling your PPR

Would this situation also trigger a CGT charge on the development or not? When you sell it, yes. If you develop it, you might also have to consider whether you pay IT rather than CGT on the sale - probably not but one to check with a proper adviser.

bd6759
Posts:4319
Joined:Sat Feb 01, 2014 3:26 pm

Re: Where does CGT Liability lie??

Postby bd6759 » Fri May 24, 2024 8:59 pm

Things to consider

1. Is this piece of land enjoyed as part of your dwelling house? That is essential for it to be covered by PPR exemption.

2. If you sell the dwelling first, the land will no longer be part of the dwelling and will definitely not have PPR exemption.

3. If you develop the land yourself you are likely to be liable to income tax.

Wilfred
Posts:2
Joined:Thu May 23, 2024 11:17 am

Re: Where does CGT Liability lie??

Postby Wilfred » Sat May 25, 2024 4:55 am

Thanks everyone.
Yes its part of the garden, currently with a large garage built on it.


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