selling renovated property

Chlopoe

Have just obtained planning permission to convert a large barn on my property and unsure whether it would be better to sell it for someone else to renovate or renovate it myself then sell - I have heard that if I renovate it to sell I would be liable for Capital Gains as it would be classed as a 2nd residence. Anyone got any advice - property is in Scotland. Thanks

Doozergirl

If you were to convert your house into flats, then I think it still classes as your main residence and you don't have to pay CGT. I'm not entirely sure as it was a barn.

If you haven't done this sort of thing before you *might* find that the renovation costs end up prohibitive and you make just as much if you just sold with the pp.

david29dpo

i have a barn i converted myself. i was going to sell it with p.p. but in the end i did renovate. the end value was far more than what it cost to do up, including the before value. i decided not to sell and been hear now for 12 years so no CGT for me!

Bean_Counter

You could well be liable for CGT is either case, as I doubt if the barn would come within the definition of a dwelling house for private residence relief for CGT purposes.

HMRC helpsheet IR283 helps define private residence relief:

http://www.hmrc.gov.uk/pdfs/1999_00/helpsheets/ir283.pdf

You could try posting on the cutting tax board if you have not already done so. Hopefully someone like jimmo will come along and provide an authoritative statement.

david29dpo

how can a converted barn not be classed as a private residence?

Bean_Counter

david29dpo wrote: »

how can a converted barn not be classed as a private residence?

Not enough info to give a definitive answer, hence the link to the HMRC website.

Chlopoe said that she was converting a large barn on her property. I took from this that she has an existing house and the barn is at the end of a large garden or something like that. In addition I assume that this is an empty barn at the moment and hence needs the conversion.

Based on my reading of IR283, the disposal of the barn would not count as being the disposal of her residence, because it is not her residence. She lives in her house (which would be exempt from CGT). She does not live in the barn.

If she converted the barn and lived in that, that could be her main residence and hence become exempt from CGT. That would mean that her existing residence would no longer be exempt as you can only have one residence.

Also I am a CA but not a CGT specialist, hence the request to post on the cutting tax boad.