Two houses One Title - Selling and CGT

chapel1

Hello,

Hope someone can help!

I bought a house this summer. It used to be two adjacent terrace houses, but in the 50's it got knocked through and is on one title.

My original plan was simply to live here and have my father living in the other side - this hasnt panned out and i now need to sell and move closer to family.

I want to sell the houses seperately to get the most back. I've done quite a bit of work getting them ready and should be ready soon.

I would like, obviously, to avoid any CGT or any IT.

Wonder if someone out there can help and advise the best route. My head is spinning!

thanks!

Doozergirl

Have you got planning permission? Separated the utility supplies etc? Building regulations sign off?

Selling them with separate titles is the easy bit. You just need to explain to your conveyancing solicitor when you decide to sell. They will split the title at the time that the first sale goes through.

I think for CGT, it was all your main residence as one property so no CGT is due when you split. ie. You bought it as one whole property, which allows you dispose of any part without incurring CGT.

chapel1

Hi,

I don't have planning permission, but it has seperate utilites and they are seperate.

Interesting to hear your take on CGT and the disposal of part of my property. I was thinking that i would incur CGT as at least one of the houses wouldn't have been my primary residence. Guess i'll have to sound out HMRC.

thanks, Paul

G_M

If they are on a single Title, and you have been living there, then the entire 'double' property has been you primary residence.

What about council tax? I assume they have been charged as a single property? You WILL nee Planning Permission(and Building Regs to separate them and set up separate CT.

Not sure where IT comes in. Since you father apparently owns neither the current property, not will own either of the 2 separated properties (so far as I understand), then his death will have no IT implications.

Your own death will also be irrelevant, unless you give the separated property away.

00ec25

chapel1 wrote: »

I want to sell the houses seperately to get the most back.

therein lies your problem because your decision to split the properties is clearly driven by a profit motive which means you are a good candidate for being held to be property developing not selling off the ex family home.

As such you could be liable for Income Tax on the profit from the sale, not CGT, as you will be held to be "trading" (income tax) not selling an "investment" (CGT)

this is a grey area and does depend on how much attention you get from HMRC , plenty of examples out there discussing the issue, here's one to start
http://www.accountingweb.co.uk/anyanswers/split-family-home-2-houses-capital-gain
and the counter argument that it is liable for CGT not IT
http://www.independent.co.uk/money/mortgages/tough-times-call-for-splitting-a-home-in-two-2034690.html

you need professional (paid for) advice from an accountant

ihatemyhouse

am sure that you might have probs selling it as 2 homes with out PP for it to be 2 homes, it is like when people turn houses in to flats and with out permission, then have to turn back to 1 house to sell

Doozergirl

ihatemyhouse wrote: »

am sure that you might have probs selling it as 2 homes with out PP for it to be 2 homes, it is like when people turn houses in to flats and with out permission, then have to turn back to 1 house to sell

I'd agree that any potential stumbling block is here. Planning permission *may* be a formality in some areas, building control may insust that one or both properties meet regulations for a new dwelling created via conversion. I don't think spending out on building work without these formalities is a sensible idea if you don't want to pay out to do work twice - once to your standard, second to building control's.

Without planning permission and a building control certificate, the two houses will be worth less than the one you paid for, OP.