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Do I have to pay CGT?

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V_Cooper
V_Cooper Posts: 21 Forumite
in House buying, renting & selling
We bought our house 20 yrs ago and now want to downsize due to ill health. We bought this property with a piece of
agricultural land (less than half an acre) with a barn also included on the deeds. Our neighbour wants to buy this land and barn prior to us selling the house and garden. My question is, would we be liable to Capital Gains Tax on this sale, and how is it worked out considering we bought the property as a whole? We are basic rate taxpayers and this is our only property. Many thanks.
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  • ProDave
    ProDave Posts: 3,721 Forumite
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    I can't answer the CGT issue but I'll bet he has in mind a barn conversion to a house. You might want to include an uplift clause so you get a percentage of the uplift in value if that happens.
  • AdrianC
    AdrianC Posts: 42,189 Forumite
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    No, no CGT. You're selling (part of) your primary residence.
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    You should be ok:

    https://www.wrightvigar.co.uk/2014/12/tax-implications-sale-garden/
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    edited 15 December 2017 at 9:30AM
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    your refer to the land as "agricultural with a barn"
    • is it joined to your "garden" as a continuous bit so if you walk out your backdoor you will get to the boundary of what is yours without leaving your "garden" and this its current use is no longer for agriculture?
    • is it fenced off from your "garden"?
    • what is the entire size of your landholding: house footprint + garden + + 1/2 acre of agricultural land incl barn's footprint? (0.5 hectare = 1.2 acres)
  • saajan_12
    saajan_12 Posts: 3,622 Forumite
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    V_Cooper wrote: »
    We bought our house 20 yrs ago and now want to downsize due to ill health. We bought this property with a piece of
    agricultural land (less than half an acre) with a barn also included on the deeds. Our neighbour wants to buy this land and barn prior to us selling the house and garden. My question is, would we be liable to Capital Gains Tax on this sale, and how is it worked out considering we bought the property as a whole? We are basic rate taxpayers and this is our only property. Many thanks.

    No CGT as you're selling part of your primary residence. However be careful of the order here: if you sell the barn to the neighbour first and he puts in plans to convert to a house, could that lower the value of the rest of your property with a now much closer neighbour? You might consider getting a buyer for the rest of the property lined up before completing the sale to neighbour.
  • V_Cooper
    V_Cooper Posts: 21 Forumite
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    The land is attached to our house and garden. Total size of whole plot including agricultural yard, barn, house and garden is under one acre (Estate Agent estimates it is 0.7 of an acre). The garden is slightly bigger than the yard. We can walk out to the barn without any gate as we removed part of the hedge to drive the ride-on mower from the barn, where we keep it, to the garden. The yard is concreted as about 45 years ago it was used by an agricultural machinery repair premises by a previous owner of the house. A potential buyer put in for a Certificate of Lawful Use for double-glazing business in it and it was refused by the Council as they still class it as 'agricultural' rather than business premises. Do you need any more information, I will reply asap.
  • V_Cooper
    V_Cooper Posts: 21 Forumite
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    He's told us he wants to buy it to STOP anyone else building on it (if we believe him?), either way, we would need to be careful to make sure the potential buyer of the house and garden is completely happy about having a potential building site next door. Would it be possible to exchange on the house, and sell him the barn whilst we are waiting for completion to avoid paying the CGT? We are both getting stressed out about this sort of shenanigans and would rather sell the whole plot to one person, but the neighbour is quite persistent, and has offered us a much better deal than any developer with no requirement for planning permission. Thanks.
  • ProDave
    ProDave Posts: 3,721 Forumite
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    V_Cooper wrote: »
    He's told us he wants to buy it to STOP anyone else building on it (if we believe him?),
    If that is true, do as I suggest, insert an uplift clause into the contract. That should demonstrate to the buyers of the house there should be no building,
  • V_Cooper
    V_Cooper Posts: 21 Forumite
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    Thanks, that may be a good option if we do sell to him. Although, how it's enforced is another matter.
  • saajan_12
    saajan_12 Posts: 3,622 Forumite
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    V_Cooper wrote: »
    Would it be possible to exchange on the house, and sell him the barn whilst we are waiting for completion to avoid paying the CGT?

    I assume the house & barn are under the 1 title currently which you'll split at some point.

    For the house, you'll live there until completion I expect.

    For the barn, you'll have Principal Private Residence relief (PPR) for the period it was part of you main home (before split) plus the last 18 months of ownership. If that covers the full period you own it (ie sell the barn within 18months of the title split), then no capital gains tax.

    If it takes longer there are further allowances that may help, but I suspect you won't have to worry about the exact order of sale from a CGT perspective.
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