Splitting Extended House into 2 dwellings - does this incur capital gains tax?

djp20478

Hi - we extended our property in 2013 from a 3 bedroom property to a 5 bedroom property.

All renovations were made with the potential option to split the property at some time in the future (years down the line when the kids have left).

For example we made all the electric and pipework easier to be transferred to a new source and we added an additional stair case on the extension.

We therefore have a 3 bedroom property with access on ground and first floor to a 2 bedroom extension (with its own bathroom, stair case, outside access etc)

Question: If we do decide to separate and sell both properties and put the proceeds of both into 1 new single dwelling would we be subject to any capital gains from the profit?

One option is to sell the house as one unit and then obviously we would not be subject to CGT but we would get less value as one than we would as two dwellings.

I know we would need to factor in getting separate services into the property and splitting the deeds (subject to planning and mortgage provider concurrence)

Many thanks for any advice

Darren

lincroft1710

Do you have planning permission to create an additional dwelling?

Savvy_Sue

lincroft1710 wrote: »

Do you have planning permission to create an additional dwelling?

An additional SEPARATE dwelling? Sometimes there are restrictions which mean that the extension can only be lived in by a relative, not let out separately and not sold separately.

lincroft1710

Savvy_Sue wrote: »

An additional SEPARATE dwelling? Sometimes there are restrictions which mean that the extension can only be lived in by a relative, not let out separately and not sold separately.

Most PPs for "granny flats" will have the clause that it cannot be let out or sold separately from the main dwelling. I think the OP would be applying/have applied for PP for a separate dwelling, rather than a "connected" dwelling

Savvy_Sue

lincroft1710 wrote: »

Most PPs for "granny flats" will have the clause that it cannot be let out or sold separately from the main dwelling. I think the OP would be applying/have applied for PP for a separate dwelling, rather than a "connected" dwelling

Yes, but I wanted to make it clear that it's not even as simple as planning permission ...

lincroft1710

Savvy_Sue wrote: »

Yes, but I wanted to make it clear that it's not even as simple as planning permission ...

Because I dealt with a lot of "granny flats" and restricted PP thereon in my job, I tend to forget that many people are unaware of the implications of restricted PP. Your point is well made.