Capital gains on old building?

the_reductionist

I want to gift my daughter an old outbuilding so that she can convert to her own home - the only way she will ever get on the property ladder.

How on earth can I calculate capital gains when I have no initial value as the building came with the house many years ago?

Many thanks for any help.

G_M

Does the outbuilding form part of the property where you live as your main home?

If yes, no CGT to pay.

the_reductionist

It's not physically part of the main property as it's a detached building once used for storing agricultural machinery. It's within the grounds of the property and currently not in a habital state - I don't know whether that makes a difference?

ognum

Does it have planning permission?

I would gift it to her legally before any permission are granted, that way the value would be small. Once it has permission to become a house its value will rocket and you will need a surveyor to tell you it's value now and when you bought it.

booksurr

is the plot of land comprising your current house, all its grounds and all and any outbuildings more or less than 0.5 hectacre?
if your total plot size if more then disposal of any part of it to your daughter will trigger CGT on you becuase the max size for exemption on the "main home" is 0.5 hectacre (5,000 sq metres or 1.24 acres in old money)

as others have said whether the disposal is before or after planning permission matters rather a lot

lincroft1710

The OP is gifting the outbuilding, therefore he can't have made a capital gain and has probably made a loss on the value of his home, yet is charged CGT, this seems very unfair, but apparently is correct.

A word to the OP, have you checked with the local planning authority that they will allow this building to be converted to a separate dwelling.

the_reductionist

Thanks for all the info so far - I will need to investigate this 0.5 hectare ruling to find out what constitutes the 'grounds' as although the garden surrounding the property (which includes this outbuilding) is well under this area, the whole plot is a smallholding which has a few acres of agricultural land so maybe I'm stymied as far as that is concerned.


I also take on board the point about gifting it while it's still in its derelict state to minimise gain but how do I value something that I never bought separately 10 or more years ago? Is it a proportional thing or a current valuation minus an estimated historical valuation?


Apparently a gift doesn't void any CG even though you've received no financial gain and even worse in certain situations there can be inheritance tax to pay as well if I've understood correctly. Good point about the planning permission - something else I want to avoid for obvious reasons at this point re increasing any current value and therefore gains and we have good local reason to believe that this won't be a problem.


Many thanks for all your help - I think the picture is becoming clearer and it doesn't look good