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Where Taxpayers and Advisers Meet

CGT Advice - splitting title and selling both

mfleet
Posts:4
Joined:Fri Jul 23, 2021 8:34 am
CGT Advice - splitting title and selling both

Postby mfleet » Fri Jul 23, 2021 10:15 am

Hi

I have searched through other questions around CGT but I couldn't find any which match what I am trying to do so hoping for some advice please.

In September 2019 me and my wife purchased a property which is our only residence. The property consisted of a very run down 3 bedroom bungalow but on 0.5 acres. We have three young children so we need more space than this bungalow gives us. Our intention was originally to extend the bungalow or rebuild if this was more economical. Whilst exploring the options for where to live during the build, we came to the conclusion that splitting off a small part of the plot and building another small house would be our best option - we would live in this whilst the bungalow works took place. Eventually we would move back into the bungalow and either sell the additional house or keep and holiday let. We obtained planning permission to split the plot and build the additional house on the split off piece. Both parts have their own access.

The planning permission was approved prior to the pandemic but build costs have now rocketed making our long term plans for this plot less achievable. House prices have however increased considerably in our village. We have therefore decided to change our plans, sell and buy a larger property without doing any builds.

Obviously splitting the title and selling both parts separately will achieve the best sale price. The larger part will include the existing bungalow. The smaller part will include planning permission for a 3 bedroom house. My question is: What options do we have to sell both and not pay CGT? I believe that if we sell the small part first then we could claim PRR as this is considered as selling part of the garden. Is there any way to sell the larger part / bungalow first?

Many thanks!

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT Advice - splitting title and selling both

Postby pawncob » Sat Jul 24, 2021 10:23 am

Not really. If you sell the house you lose PPRR on the plot.
With a pinch of salt take what I say, but don't exceed your RDA

mfleet
Posts:4
Joined:Fri Jul 23, 2021 8:34 am

Re: CGT Advice - splitting title and selling both

Postby mfleet » Mon Jul 26, 2021 8:17 am

OK so selling our plot first is essential and we will then be covered by PPRR on the sale of both. Is it only the Completion date that matters? If we were to exchange contracts on the house before the plot, I assume this wouldn't matter providing that completion of the plot occurs before the house?

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT Advice - splitting title and selling both

Postby pawncob » Mon Jul 26, 2021 10:11 am

Assuming the contract is unconditional, it's exchange that matters.
With a pinch of salt take what I say, but don't exceed your RDA

mfleet
Posts:4
Joined:Fri Jul 23, 2021 8:34 am

Re: CGT Advice - splitting title and selling both

Postby mfleet » Thu Aug 05, 2021 8:08 am

I have been thinking about this more. Lets say I were to:
1. Sell the house.
2. Build the new dwelling on the plot.
3. Live in this new dwelling on the plot for 2 years as my PPR.
4. Sell this dwelling after the 2 years.

I assume I would then be entitled to at least some relief?

Here are the values and dates involved:
- Entire property purchased in Sep 2019 for £520k
- Offer currently accepted on the main house for £900k
- Plot with planning permission currently valued at £650k - we have been trying to sell this before the main house but this is looking unlikely as the market is obviously smaller.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT Advice - splitting title and selling both

Postby pawncob » Thu Aug 05, 2021 9:45 am

Assuming you are not a builder and you haven't done this before, you'd get PPRR on both sales.
With a pinch of salt take what I say, but don't exceed your RDA


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