Selling a new build property

suzb74

Hi,

My parents have just had a property built in their grounds as a separate dwelling and we are planning on renting it out, however there has been a lot of local interest by people asking when is it going on the market i.e. to sell.

Is there anyway round the capital gains tax by them signing it over instead to me and my brother, so then can sell it instead of renting it our for the next 3-years?

Many thanks in advance for any advice!

jimmo

I am afraid that your parents have got themselves into a pretty pickle tax wise. However entrepreneurs look to maximise profits before worrying about tax and they may well have done the right thing.
It is pretty traditional that people sell a part of their garden to property developers and are exempt from capital gains tax in selling part of their main residence. Then, the physical separation of the building plot from the main residence takes place at, or after the point of sale.
In your parents' case the physical separation of the building plot from the main residence has definitely taken place before the plot has been sold and so, when the plot is sold it will not be a part of their main residence and will not be exempt from Capital Gains Tax.
I would suggest that your parents need to be wary of being identified as property developers and chargeable to Income Tax on their profits rather than worrying about minimising Capital Gains Tax.
They should have sought quality professional advice before embarking on this venture and they certainly need it now.

antrobus

As far as I'm aware the transfer of ownership of a property between parents and siblings would itself be deemed to take place at market value and attract CGT, so that's not going to be of any help.

I'd echo the comments made above, and advise the parents to get and pay for some proper professional advice.

mrschaucer

Don't shoot me if this is wrong, but why don't the parent/builders move into the new build for however long it takes for it to become their main residence, and then sell it? (I'm sure it can't be that simple ...)