Capital Gains Tax on detached garden land

tole · 28 March 2015 at 10:40AM

Hi.
Appreciate if anyone can shed any light on this one. (It is a little complicated)

I jointly own land with my wife - which is 3 separate adjoining garden plots which are separate from the house itself - which were accumulated from owning 3 separate properties ( owned one after the other) over years dating back from 1985, 1997, and 2002

The land was basically the properties garden/allotment and was located around 200m away from the property itself.

The properties have since been sold and are no longer owned - the last one sold in 2003. Where I sold teh property but kept the land.

I have now been granted outline planning on this land as one plot and am selling it on at circa £60k

Can anyone shed any light on what capital gains might be applicable - (or speciafically how I can reduce any tax bill) it is confusing as the land was garden land and I am unsure if there is any taper relief applicable since the plots were all owned for greater than 10 years, and since I kept the land split from the original property sale - I am unsure what the lands original residual value would be?

Any help greatly appreciated.

Thanks in advance

System · 28 March 2015 at 5:16PM

I can't answer the CGT base value point, but I do know that the exemption for sale of part of your garden applies only if the plot is within the curtillage of the property and is essential for the enjoyment of that property. (I know there is a paradox there, because if it is essential how are you going to manage if it is sold?)

Large plots, and those physically separate, can sometimes be argued as falling into this category (It is not uncommon for some houses to have their gardens in front on the opposite side of the road, for example) but it might be difficult to argue this case if your gardens were not historically integral with the house but added separately.

zygurat789 · 28 March 2015 at 5:38PM

May I just ask what use you made of the three houses which are now sold?

tole · 28 March 2015 at 8:39PM

Thanks - Yeah I had read the point about the exemption being related to land adjoining the actual property. And since this land is seperate that is what makes this rather complicated. The plots are not particularly large (hence why outline planning has only granted the building of one property on all three plots) Albeit I am sure you could get two 3 bed props on it quite easily.

The land has been maintained as an allotment really and used to grow fruit and veg for all the time it has been owned. There are about another 5 properties which also have the same situation where their garden land is situated in the same location away from the actual house itself.

As for the use of the properties - the first had been owned for c20 years as a second holiday home - where we moved into it as a main residence when our other main home was sold.
From that we sold this home and purchased a property two doors up and lived there as a main residence. Then some years later we sold that home and bought the property next door which was again out main home briefly and we eventually flipped this home and moved on. So all homes listed as our main residential property.

Any further help on the tax liability for selling this now separate land would be appreciated.

Thanks

jimmo · 29 March 2015 at 12:30AM

I am afraid that there is no point in worrying about whether the land constituted gardens of former homes because, even if it did, there is no relief available.
http://www.hmrc.gov.uk/manuals/cgmanual/CG64377.htm
Also taper relief was abolished in 2008 and is no longer relevant.
http://www.hmrc.gov.uk/manuals/cgmanual/CG17895.htm
For each of the 3 properties mentioned, when you sold the house and retained the land that constituted a part disposal and the original purchase cost needed to be apportioned between the part sold and the part retained. That apportionment requires a valuation of the land retained at the date of sale of the house
http://www.hmrc.gov.uk/manuals/cgmanual/CG12731.htm

tole · 29 March 2015 at 8:01AM

jimmo wrote: »

I am afraid that there is no point in worrying about whether the land constituted gardens of former homes because, even if it did, there is no relief available.
[/URL]
Also taper relief was abolished in 2008 and is no longer relevant.
[/URL]
For each of the 3 properties mentioned, when you sold the house and retained the land that constituted a part disposal and the original purchase cost needed to be apportioned between the part sold and the part retained. That apportionment requires a valuation of the land retained at the date of sale of the house
[/URL]

Thank you. Appreciate your reply and knowledge of the matter. Since i have no formal valuations of the land at the time the part disposal of the properties took place can i still go down this route? How can i get a valuation now of what they worth when i sold the houses? Is that even possible? Thanks

antrobus · 29 March 2015 at 10:07AM

tole wrote: »

...How can i get a valuation now of what they worth when i sold the houses? Is that even possible?...

You contact a chartered surveyor and obtain professional valuations.

I would guess that, given that the value of a stand alone allotment plot versus the value of a house, you would not be talking about a large fraction of the original cost anyway.

zygurat789 · 29 March 2015 at 10:14AM

tole wrote: »

Hi.

I have now been granted outline planning on this land as one plot and am selling it on at circa £60k

Can anyone shed any light on what capital gains might be applicable - (or speciafically how I can reduce any tax bill) it is confusing as the land was garden land and I am unsure if there is any taper relief applicable since the plots were all owned for greater than 10 years, and since I kept the land split from the original property sale - I am unsure what the lands original residual value would be?

Any help greatly appreciated.

Thanks in advance

So you now have a cost price and c£44k of exempt amounts if you sell the plots in two different tax years say April 4 & 6.
Should bring it down a bit.

tole · 29 March 2015 at 3:51PM

zygurat789 wrote: »

So you now have a cost price and c£44k of exempt amounts if you sell the plots in two different tax years say April 4 & 6.
Should bring it down a bit.

Good thinking on the different tax years. Although I suppose that depends on the buyer wanting to accomodate this. Thanks

tole · 29 March 2015 at 3:59PM

How about gifting part of the land to my children and selling the plot as owned by four people? Then accumulating cgt allowances of four people. Or is that just getting messy?

Personally seems rather unfair that although i have held this land in parts for many years (as early as 1985 for one of the three plots) I cannont taper any form of relief on the sale of it - as it was obviously of negligable value as garden land and I have jumped through hoops with planning departments to get this signed off for development.

Being able to only use one years cgt allowance if it comes to it (albeit joint for myself and the missus) that still leaves quite a bit of tax to pay on something that I have owned for 20 odd years. The land value is likely to come up of negligible amounts, so could be CGT liable at circa £38k if I sell at £60k and jointly use CGT allowance for this year. Anyone got any other sneaky suggestions to limit the amount of tax I am all ears

Thanks.

quietriot · 29 March 2015 at 6:24PM

tole wrote: »

How about gifting part of the land to my children and selling the plot as owned by four people? Then accumulating cgt allowances of four people. Or is that just getting messy?

Your children are connected persons for CGT purposes. If you gift them any land you will be deemed to have sold it to them at full market value.

Capital Gains Tax on detached garden land

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