Barn conversion that has gone very wrong

Doozergirl

davidmcn wrote: »

It's (probably) only the farmhouse which would qualify for relief as the principal residence, the remainder of the farm is business property.

I forget that people actually farm and don't just buy barns for me to convert

ThePants999

Surely you don't mean the capital gains tax is £30K? That would imply that a half-finished conversion of a barn has added over £150K to its value, which seems unlikely. Surely it's just the capital gain itself which is £30K? Meaning, as silvercar said, the tax to pay is small.

00ec25

your parents need proper advice from a professional

* at age 90 and 85 they are near death, they own a farm (or otherwise they would not be able to dispose of its outbuildings). The farm is a commercial asset covered by specific inheritance tax rules

* what arrangements have they made for inheritance tax?

* gifting a barn forming part of the farm's outbuildings to their child that close to death means it will still be part of their estate for IHT purposes when they die

* the market value of an incomplete building project which also has planning permission restrictions when completed is a subject for a professional valuer to decide

* the gift would be a disposal for CGT purposes, and an outbuilding is not covered by principal private residence relief. Also, because they are connected persons, the value to use in calculating the gain must be the market value of the building, not whatever cash changes hands, nor its value as a (finished) converted barn

on that basis you have no idea yet what the gain is for CGT purposes. Why do you think it is 30k?

lincroft1710

What was the reason for converting the barn if it cannot be sold or let out separately from the main house?

pinklady21

How far away are they from completing it? What still requires to be done?

Nobbie1967

Eh?

In the OP you said it was converted in the hope to gift/SELL to the brother, but then you go on to say that the planning consent states that it cannot be sold??? How was that plan supposed to work out?

Hoploz

If they gift it to him then he would have some ownership and therefore be able to gain finance on it, even though there may later be IHT considerations. However clearly the inability to split the Site remains an issue.

Commercial property is not counted under IHT in the same way as residential property so that is likely to be relevant. Therefore there may not be IHT if the farm is their only asset, even if it comes in above the £1m allowable value.

I think you need advice on what is going to happen when they do eventually pass away - is everything written in to their wills? Were the wills written with full advice taken on this scenario? Often wills are kept 'simple' and when they come into effect, what the people thought would happen does not, as the will is simplistic and does not reflect the complexity of the property involved. So get that looked at ASAP!

My point is, it isn't just the barn which is relevant here, as if the whole plot is one Lot, then you need to sort out what's what with everything taken into account.

Out,_Vile_Jelly

You really need professional advice on this complicated situation for your parents' peace of mind.