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  • FIRST POST
    • Dazflash
    • By Dazflash 7th Jul 17, 2:28 PM
    • 5Posts
    • 4Thanks
    Dazflash
    Tax on garden sale
    • #1
    • 7th Jul 17, 2:28 PM
    Tax on garden sale 7th Jul 17 at 2:28 PM
    We have a property that we rent and a developer wants to buy part of the back garden for new build housing. Can anyone let me know if we will be liable to pay any tax on this?

    Thanks!
    Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.
    Martin Luther King
Page 1
    • Keep pedalling
    • By Keep pedalling 7th Jul 17, 2:35 PM
    • 3,428 Posts
    • 3,696 Thanks
    Keep pedalling
    • #2
    • 7th Jul 17, 2:35 PM
    • #2
    • 7th Jul 17, 2:35 PM
    If the gains are high enough you will have a capital gains tax liability.
    • Cook_County
    • By Cook_County 8th Jul 17, 3:13 PM
    • 2,885 Posts
    • 2,067 Thanks
    Cook_County
    • #3
    • 8th Jul 17, 3:13 PM
    • #3
    • 8th Jul 17, 3:13 PM
    Best to sell soon before the government reintroduces a development land tax.
    • tebthereb
    • By tebthereb 9th Jul 17, 7:22 AM
    • 37 Posts
    • 11 Thanks
    tebthereb
    • #4
    • 9th Jul 17, 7:22 AM
    • #4
    • 9th Jul 17, 7:22 AM
    We have a property that we rent and a developer wants to buy part of the back garden for new build housing. Can anyone let me know if we will be liable to pay any tax on this?

    Thanks!
    Originally posted by Dazflash
    Assuming the amounts involved are not tiny you really need to take proper advice on this from a qualified tax advisor, as there are a lot of variables here and there is the potential to both save a lot of tax and also to really mess it up and get hammered by HM Revenue & Customs.

    The past use of the property, current ownership/structure of the property, proposed structure of the deal, are a couple of potentially relevant factors - and this is even before getting into the anti-avoidance rules which can apply to treat receipts from 'slice of the action' type deals with developers as subject to income tax, not capital gains tax.

    Please, take proper paid advice at an early stage and do not rely on a forum for such things as this is a complex area of tax and good advice will be valuable. *removed by Forum Team, please remember that asking users to contact you directly is not allowed - if it's good advice then please share it with everyone! That's what it's all about! *
    Last edited by MSE ForumTeam1; 09-07-2017 at 4:26 PM.
    • le loup
    • By le loup 9th Jul 17, 9:43 AM
    • 3,551 Posts
    • 3,355 Thanks
    le loup
    • #5
    • 9th Jul 17, 9:43 AM
    • #5
    • 9th Jul 17, 9:43 AM
    Please, take proper paid advice at an early stage and do not rely on a forum for such things as this is a complex area of tax and good advice will be valuable. Contact me direct if you like.
    Originally posted by tebthereb
    Hmmmmmmmmmmmmm!

    Not touting for business are you?
    • tebthereb
    • By tebthereb 10th Jul 17, 5:39 AM
    • 37 Posts
    • 11 Thanks
    tebthereb
    • #6
    • 10th Jul 17, 5:39 AM
    • #6
    • 10th Jul 17, 5:39 AM
    No I am not.

    I was trying to be helpful. I have no business; I am an employee. The thrust of my post was clearly to take advice. Not to take advice from me.

    I added the line you focussed on as some people may not know where to go for help on this sort of thing so saying to them "get help" is not entirely helpful. I certainly dont when it comes to, say, plumbing.

    I do know where he can go for help as I work in tax. I probably wouldnt recommend my firm for low value/simple stuff as we are not best value there.
    • le loup
    • By le loup 10th Jul 17, 8:41 AM
    • 3,551 Posts
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    le loup
    • #7
    • 10th Jul 17, 8:41 AM
    • #7
    • 10th Jul 17, 8:41 AM
    Thank you for clarifying that.
    • Dazflash
    • By Dazflash 10th Jul 17, 11:53 AM
    • 5 Posts
    • 4 Thanks
    Dazflash
    • #8
    • 10th Jul 17, 11:53 AM
    • #8
    • 10th Jul 17, 11:53 AM
    I have followed up on this and have got mixed advise. HMRC said that even though the property is let, because the area being sold is less than half a hectare, and the fact that I will still own the house, no CGT is payable at this time. It would be eligible if and when i sell the house.
    But the accountant for the developer told me CGT would be due.
    I will recontact HMRC for further info and post here with feedback
    Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.
    Martin Luther King
    • 00ec25
    • By 00ec25 10th Jul 17, 12:16 PM
    • 4,529 Posts
    • 3,912 Thanks
    00ec25
    • #9
    • 10th Jul 17, 12:16 PM
    • #9
    • 10th Jul 17, 12:16 PM
    bear in mind that the person you spoke to at HMRC will be a call centre person with little or no technical knowledge of CGT. They will simply be reading scripts off the helpdesk system. Those scripts deal with very simple scenarios and unless you speak to a CGT specialist (which you won't as you won't be put through to one of them) you will only get a general answer

    the developer's accountant on the other hand regularly deals with such situations and presumably knows more details about your particular deal than the HMRC call centre person was given?

    in other words, if you contact HMRC again make sure you go through every detail and establish if the person you are talking to knows CGT, or is just employed to answer the phone.
    • tebthereb
    • By tebthereb 10th Jul 17, 7:40 PM
    • 37 Posts
    • 11 Thanks
    tebthereb
    I would not place any faith in HMRC's comments either.

    Reference to half hectare relates to the exemption for your main residence, which I am guessing this is not although I suppose it could be relevant if it was in th past (as I suggested before points like this need exploring with a proper advisor).

    The developer will likely know the main issues but they will be thinking of themselves, not you.
    • Vaskor
    • By Vaskor 11th Jul 17, 4:15 AM
    • 11 Posts
    • 6 Thanks
    Vaskor
    I would have expected it to be treated as a part sale, so you would pay CGT on the proceeds less the deemed market value when you acquired the property, less any unused CGT annual allowance. I'm an accountant, but not a tax accountant, though, so this isn't my specialist area.
    • SYTax
    • By SYTax 13th Jul 17, 9:38 PM
    • 12 Posts
    • 1 Thanks
    SYTax
    The default position is that this will be a part disposal. The gain will be calculated as proceeds less:

    cost*A/(A+B)

    Where
    cost is purchase cost of original asset
    A is value of part of asset you are selling
    B is value of remaining asset

    It will only need to be declared on a tax return if the proceeds were more than £44,400 or gain more than £11,100.

    Alternatively you may be able to claim it as a small part disposal (google it for conditions).

    I suspect the default position will be better though and it will preserve a higher base cost for the rest of the property.
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