Build & Sell? or just Sell?

AfterMath

We (me and the wife, kids etc!) have a dream of owning a second home/holiday home in France. We have a plot of land (it is building land) kindly given to us by my father-in-law. And to fund the purchase of a second home I was thinking of borrowing from the bank to build a domestic property on the land. and then sell it, thereby, making a better profit than just selling the land. We have had an offer for the land, so I know I can easily take that option. I wondered if anyone has been in this or similar situation or can advise on the tax implications. The house prices roundabouts are extremely favourable, well certainly not below the national average.

lipidicman

You need to do the figures really. Is the extra return worth the effort? Can you afford to put the optimal property on the land (ie if it is big, can you afford to put a big house on it, can it be subdivided). You also need to account for the interest on the loan to do the work etc, etc.

AfterMath

I am making an assumption that it is worth building and then selling, would CGT apply to the value of the land or the land plus building?

Thefunkygibbons

Typical development profit is upto 30% so if you can afford to build, then your return will be higher if you do that

Ian_W

After Math wrote: I am making an assumption that it is worth building and then selling, would CGT apply to the value of the land or the land plus building?

I am certainly NO expert but I would have thought that CGT would apply, as the name suggests, to the GAIN. That is, what you paid for the land + development/building costs taken from your final sale price less any allowances etc.

CGT is an extremely complex tax which may or may not have special rules for land development. Try posting on the Tax threads - several helpful accountants lurk there - but in the end you may need to seek professional advice.