Selling agricultural land, tax advice

brodawel

We have found a property we would like to buy but it comes with 6 acres of land that we don't need or want. We have asked if they would consider selling just the house but the vendor would prefer to sell it all. The land has separate road access but development potential is highly unlikely, it's fairly rural and not close to other dwellings.

We are thinking of buying it and trying to sell the land straight away or in the future. It's in a good area with good access and consists of 4 fields mostly level and dry. Other fields near by have sheep on. Roughly assuming we get between £5K-£10K per acre, what's the best way of doing this? How do we know the value of the land for CGT? If we sell it straight away, who decides how much it was worth and whether or not we have made a gain, or even a loss?

Any advice and other thoughts much appreciated, thank you.

booksurr

you take professional advice - valuing land is a very specialist area especially if it has agricultural use restrictions on it

get a land valuer to dis-aggregate the building value from the total purchase price so you have professional opinion as to the purchase value of the land. Then once sold if HMRC challenges you for CGT you will have someone with professional indemnity to represent you

http://www.rics.org/uk/knowledge/glossary/agricultural-land-prices/

whether you will have to declare/pay CGT depends on the above !

tom9980

The other option is to rent the land to someone, which is what my in laws do to the local farmer. The advantage here is the farmer will maintain it to keep in livestock and it wont be overgrown with neglect. It also means you have some form of control over what goes on around your property.

brodawel

Thank you very much for both replies.

Would we need to instruct the land valuer before we complete the purchase? or just sometime later on?

Also, I've just checked the SDLT rates and it seems to me we save a bit of money on the purchase as it's mixed with non-residential. So that's a bit of good news!

fed_up_and_stressed

If you need a mortgage to buy you will need to get permission from the lender to dispose of some of the land you are purchasing.

smallholdingsister

If you are in the South West then Stags often sell land.

Also worth a look uklandandfarms website.

It is possible to sell 'standing grass' for hay which someone cuts, bales and removes.

I wish I had your problem!

ognum

You need a land agent to value your land at purchase, I did this for probable a couple of years ago so can let you know of a good one in the Kent area if that is useful just PM me.

We also let land to a farmer who keeps livestock on the land and his contract means he is responsible for maintaining the boundaries and ensuring livestock cannot get on roadways etc.

brodawel

Thank you. We are in North Wales but there is a local land agent/auctioneer who we can ask. It would be nice to get something back for the land so we have paid less overall, but renting to a farmer would also be ok in the short term until we need the money.

smallholdingsister

You don't fancy farming tourists then, campsite?

brodawel

smallholdingsister wrote: »

You don't fancy farming tourists then, campsite?

Apparently it's hard to get permission here for new ones as there are already quite a lot. It's also a big farming area and I think they want to keep that. Good idea though!

Davesnave

I know things are different in North Wales compared with where I live, but I'd not willingly sell off the 5 acres that goes with my house, because I'd be unlikely to receive enough to offset the loss of value on the property as a whole.

While that acreage is there, I have a potential equestrian set-up and I also keep control over what happens in the immediate area around me.

Like others, I actually farm it via a loose tenancy, and the option to sell always remains, should some unforeseen need for £££ arise. Meanwhile, that land isn't exactly losing value.