Capital Gains Tax due on new build.

Appleyard · Postby **Appleyard** » Fri May 06, 2005 4:53 am

Please can you help me?
I plan to build a new house in the garden of our existing house. Once the new house is ready, I will sell my old house and move into new house.
Once new house is ready to sell (ie gardens landscaped and interior decorated etc) it is my intention to sell new house and buy a dream house to live happliy ever after.
My questions: My main residence will shift from old house to new house. Do I have a minimum time priod when I have to stay in new house before I can sell it to avoid CG tax. It will be my only place of residence as I will have sold the old house.
Many thanks for your help.

Walter

Instinctive · Postby **Instinctive** » Fri May 06, 2005 12:05 pm

If you are building a new house with a view to selling at a profit, it may not be allowed the exemption of PPR, ie it could be taxed in full. There is also a risk that you may be taxed to income tax as a property developer.

Ramnik

Appleyard · Postby **Appleyard** » Fri May 06, 2005 1:35 pm

Thanks Ramnik. So what you're saying is I'm done all ways round?
What if I were to move from old house to new house, because old house is too big and I like the area and want to down-size so move into new house. I then find I have to move again in a years time. Would that still make me a profit hungry property developer?

Walter

Instinctive · Postby **Instinctive** » Sat May 07, 2005 1:50 am

I don't accept that 'you are done all ways round'. The law says that you can have all your gains free if you bought, and used, the property for your personal residence. If you are doing this as a business, then you cannot expect to have it free of CGT.

The Inland Revenue will look at all the facts surrounding your transactions and you will need to convince them if challenged.

Ramnik

Appleyard · Postby **Appleyard** » Sat May 07, 2005 2:16 am

Thanks,
I am not in the building business and any profit I make is welcome but not my means of income.
I will seek advice and thank you for your input, but I am in a grey area where I would welcome any profit from the new build but I am not doing this as a source of income but to maximise my capital for the (ultimate) house purchase.
Thank you

snettergal · Postby **snettergal** » Sun May 08, 2005 1:31 am

I presume in reality you would do as all serial self builders and forget you ever asked these questions, instead doing as you describe but with the "intention" of living in your new house for say a year 'til ,lo & behold you find your new house not really suited to your needs (too large) and you move on cgt free.

King_Maker · Postby **King_Maker** » Sun May 08, 2005 2:10 am

There is no minimum period of occupation for a property to qualify as a residence.

It is "quality rather than quality" which is important.

If you intend to stay in your new house for around 1 year, then you are unlikley to receive a challenge from the IR over exemption from CGT.

Appleyard · Postby **Appleyard** » Sun May 08, 2005 6:52 am

Many thanks all of you for you input.
I am clearer now in what I must do.
Walter

King_Maker · Postby **King_Maker** » Sun May 08, 2005 8:42 am

Apologies - phrase should have been :

"...quality rather than quantity..."

kevan hammond · Postby **kevan hammond** » Mon Oct 03, 2005 3:55 am

Im planning on dividing my mothers plot in two buying one half 4 myself and then building a pair of semi's on it. Does she have to pay cgt on the half that ive bought and how long do we have to live in the property before we can sell
"King_Maker" says a yr (above)