Tax - New Home

jpeat

Hello,

I am pretty new to this forum, I hope I have published this in the correct place Any help on our dilemma is much appreciated!

My dad owns a building company, his dream has always been to build me my first house. 21 years later and his dream has come true. However we are unsure as to how we can get around this. He has a plot of land and has planning permission for four houses. If my dad sells one to me, he is not going to make any money but will still have to play tax?

We have quite a bit of deposit between myself and my partner. If we could buy the land off him with our savings, would we be able to get a self build mortgage as young first time buyers? Would we till need cash for a deposit?

If anybody has any thoughts or suggestions that would be great. Or have a way my dad doesn't have to pay tax on our house because he is not making money.

Thanks for reading!!

booksurr

your father would only pay tax if he sells the house to you for more than it cost him to build it, ie he makes a profit.

no profit = no tax

make sure his accountant is aware of what he is doing so the cost of the development is recorded in detail and he can then clearly show that 1/4 of that cost related to your house and that is exactly how much you paid him for it

CLAPTON

jpeat wrote: »

Hello,

I am pretty new to this forum, I hope I have published this in the correct place Any help on our dilemma is much appreciated!

My dad owns a building company, his dream has always been to build me my first house. 21 years later and his dream has come true. However we are unsure as to how we can get around this. He has a plot of land and has planning permission for four houses. If my dad sells one to me, he is not going to make any money but will still have to play tax?

We have quite a bit of deposit between myself and my partner. If we could buy the land off him with our savings, would we be able to get a self build mortgage as young first time buyers? Would we till need cash for a deposit?

If anybody has any thoughts or suggestions that would be great. Or have a way my dad doesn't have to pay tax on our house because he is not making money.

Thanks for reading!!

usually the disposal price is the sale price : there are circumstances where the market value has to be used : as you are his son and are considered a connected person, he may have to use the market value.

booksurr

CLAPTON wrote: »

as you are his son and are considered a connected person, he may have to use the market value.

i don't think so, father is a builder so is trading and thus subject to income tax (or corporation tax if he is a company). I think you are confusing disposals and CGT which won't apply here as father is (I assume) subject to trading rules not CGT rules .

CLAPTON

booksurr wrote: »

i don't think so, father is a builder so is trading and thus subject to income tax (or corporation tax if he is a company). I think you are confusing disposals and CGT which won't apply here as father is (I assume) subject to trading rules not CGT rules .

right...............

jimmo

CLAPTON is correct.

booksurr wrote: »

i don't think so, father is a builder so is trading and thus subject to income tax (or corporation tax if he is a company). I think you are confusing disposals and CGT which won't apply here as father is (I assume) subject to trading rules not CGT rules .

True but the rule on non-commercial disposals of trading stock is remarkably similar to the connected persons (strictly, disposals not at arms length) rule for CGT.


http://www.hmrc.gov.uk/manuals/bimmanual/BIM33610.htm