CGT on Sale of Developed Property

tightbarsteward

A friend of mine is in the fortunate position where he is considering buying an old house in Scotland, doing it up while living in it then selling it on for a profit. He may also live in it for up to 1 year after it is finished.

Would he be liable for CGT on the sale or not? I seem to remember hearing stories about builders who actually build houses, live in them for 6 months thus avoiding GCT on the sale.

fengirl_2

It depends on whether or not he owns another property. If so, he would need to nominate the new property as his main residence in order to avoid CGT. The 6 mth residence thing is a myth.

tightbarsteward

He jointly owns another property which they did rent out but now its on the market. He just rents where he lives at the minute.

roger196

Although isolated land transactions can be caught as trading, repitition is a useful factor. If your friend has done this several times in the past,then an alert inspector would go back over all the earlier transactions to get the lot as trading. If you look at the wisdom v chamberlain case, the dealing in silver bullion were only caught when he started making substantial profits. What is your friends trade, if linked to the building industry, trading is more likely. If your friend has to sell in order to repay finance, trading likely. There are ten indicia of trading, some are more important than others depending on the facts of each case see www.hmrc.gov.uk.