Capital Gains Tax-Self Build

the.office

Can anyone help with the above problem. I bought a house and it has a fairly big lump of land for city location and have applied and gained full planning permission for a four bedroom property to be built. I own the current house on the land and live in it and have done for 8 months. where do i stand on tax if i sell both at the end of the build and buy a new home elsewhere??

cash99

Did you buy the property with the intention of developing? If so then potentially the gain on both houses is taxable as income at your top tax rate.

Otherwise you should get the usual capital gains tax exemption on the house you are living in, and have to pay either income tax or capital gains tax ( it depends on your exact circumstances ) on the development profit.

Potentially there are ways to minimise the tax. A chat with a good tax accountant would be worthwhile, but do it now so that they have some options to work with. Its hard to plan after the event.

the.office

cash99 wrote:

Did you buy the property with the intention of developing? If so then potentially the gain on both houses is taxable as income at your top tax rate.

Otherwise you should get the usual capital gains tax exemption on the house you are living in, and have to pay either income tax or capital gains tax ( it depends on your exact circumstances ) on the development profit.

Potentially there are ways to minimise the tax. A chat with a good tax accountant would be worthwhile, but do it now so that they have some options to work with. Its hard to plan after the event.

:eek: Thanks for the tip, but it was not an intentional plan to do a four bed house, but i did like it originally for the possibility of a good sized extension for my family. but the architect i hired told us the other possibility and said we could clear mortgage with other house. seemed like a good idea?? No??