Only selling half the garden with house

azerazer

Hello
We are putting our house up for sale, but we only want to sell half the garden with the house. The other half will be combined with a neighbour's access strip to create a building plot (that's the plan anyway). A fence is to be erected before the house goes on the market.
My question:
Do I need to get the land deeds updated before the house goes up for sale or can this just be done at the point of sale?
Thanks for reading.

eddddy

azerazer wrote: »

The other half will be combined with a neighbour's access strip to create a building plot (that's the plan anyway). A fence is to be erected before the house goes on the market.

You need to be careful doing what you describe - you might lose Principal Private Residence relief for Capital Gains Tax.

It might be better to sell/transfer the land for the building plot, before selling the house.

As this accountant says:

To ensure any relief is available, the land should clearly be part of the gardens or grounds and used as such until the date of sale, so it should not be separated or fenced off from the area you are going to retain. We would also recommend you keep evidence of the area being sold was used as an integral part of your garden (for example taking photographs of the garden in use).

Link: https://www.krestonreeves.com/news-and-events/26/06/2017/selling-part-of-your-garden-for-development-could-be-a-shrewd-move

da_rule

You don’t need to do anything before the sale. You will just execute a TP1 (transfer of part). This will remove the house (and the part of the garden you are selling) from your current title and generate a new title for the buyer.

azerazer

Thank you for the responses. da_rule, great, I'm glad it can be as simple as that.
eddddy, thanks for link. Particularly:
"To ensure any relief is available, the land should clearly be part of the gardens or grounds and used as such until the date of sale, so it should not be separated or fenced off from the area you are going to retain." I suppose most people would be keeping the house and part garden while selling off a bit of land, whereas I plan to do the opposite. I think I need to get this clarified as unlike when selling a plot, I really could do with having the fence in place for selling the house. You are right that the land could be sold/transferred before the house to avoid any issues.

Thinking ahead... If I kept the land after selling the house, managed to build on it and sold the new house in a couple years without ever living in it, would I then be due to pay tax on the sale price minus building costs? Possibly better to sell the land tax free?

Thank you. I did approach a solicitor about this, but still waiting on any sort of answer.

Doozergirl

It's a tax accountant you need, not a solicitor if you're talking about tax!

AdrianC

Do you currently have a mortgage on the property?

azerazer

Doozergirl, thank you.
Adrian, well, this is another part of the tale. At the moment there is less than £10k on the mortgage. However, I am in the process (had first meeting with broker) to get a 75% mortgage on property before it goes up for sale as I need this money pretty quickly for another venture. If I am going to transfer part of garden, I am aware I should do before applying for the new mortgage as the new lender may reject the idea.

Doozergirl

azerazer wrote: »

Doozergirl, thank you.
Adrian, well, this is another part of the tale. At the moment there is less than £10k on the mortgage. However, I am in the process (had first meeting with broker) to get a 75% mortgage on property before it goes up for sale as I need this money pretty quickly for another venture. If I am going to transfer part of garden, I am aware I should do before applying for the new mortgage as the new lender may reject the idea.

They will.

You need to get your skates on, in that case, and try and push the urgency on your solicitor as I bang on about it to mine and they still take forever to do anything, and then the Land Registry has a massive backlog that needs to be circumnavigated.

azerazer

Right, so just to clarify, I should get a TP1 (transfer of part) done via a solicitor before I do anything else? Then I can put a fence up, remortgage, then put the house up for sale?
I appreciate the advice everyone. This internet is a wonderful thing.

AdrianC

You'll need your current lender onboard - but, at 10% LtV, that shouldn't be hard.

davidmcn

In case it isn't obvious, bear in mind you'll also need to find a buyer who's prepared to move in next to a building site (you'll hardly be able to hide your proposals from them).