Land splitting and Capital Gains Tax

kjrbetts

Hi all. I'll keep this as concise as possible. Would love some opinions or information...

We have a very big garden and plan to apply for planning on it.
Current lender (CoOp - Britannia) will not sign a form consenting to the application because our LTV is not very high. That's fine, I (sort of) understand. We are due to remortgage in October anyway.

I spoke to my solicitor who said that when we remortgage, we should split the garden and do the remortgage on the valuation of the house minus the piece of land - effectively rendering the land ours without mortgage and so no requirements.

My question, though, is that if we own that piece of land and are mortgaged on the rest of the property, should we gain the planning permission on the land, would it then be subject to capital gains tax? (we plan on selling the land, not build on it - and my understanding is that currently sale of land as part of a property is not subject to CTG). It's a small plot - for a two or 3 bed house.

Many thanks in advance

kingstreet

Not a clue, sorry.

This may get a better response on HBR&S.

Wh05apk

Initial thoughts are that if your LTV is high now (I assume that is what you meant?) then surely splitting the garden, will increase the LTV even more making it less likely you can remortgage?


I think the land will be liable to CGT, unless you sell it as part of your main residence, if you break it off, then sell it, then I think you will be liable.

kjrbetts

Thanks Wh05apk

I expect the LTV on remortgage will be around 70%.
I also expect we will use a new mortgage lender (so effectively, they will never have known about the land and all valuations will be based on the new land size of old house. That will therefore not affect the LTV).

I understand if you sell land that if you split land that is a part of your main residence, you are not liable to CTG. I'm guessing my situation might be that as I separate it before the mortgage, it renders it separate.