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  • FIRST POST
    • FarmerGilesUK
    • By FarmerGilesUK 4th Jul 18, 12:32 PM
    • 52Posts
    • 8Thanks
    FarmerGilesUK
    Selling land (part of my property)
    • #1
    • 4th Jul 18, 12:32 PM
    Selling land (part of my property) 4th Jul 18 at 12:32 PM
    Hi all.

    We are considering selling some of the land attached to our property (for 60k).

    Are there any tax implications I should be aware of?

    Regards
Page 1
    • Ozzuk
    • By Ozzuk 4th Jul 18, 1:17 PM
    • 1,487 Posts
    • 2,152 Thanks
    Ozzuk
    • #2
    • 4th Jul 18, 1:17 PM
    • #2
    • 4th Jul 18, 1:17 PM
    You might want proper advice on this - its possible as you'll be splitting the land off (and you'll need permission from lender if you don't own outright) once is becomes a seperate asset its no longer part of your primary residence so it could indeed become liable for tax.

    I could be talking rubbish though!

    I just did a quick google as I was curious, didn't find much info. Perhaps talk to the HMRC as it seems to depend on type of land, size of land etc.
    Last edited by Ozzuk; 04-07-2018 at 1:24 PM.
    • eddddy
    • By eddddy 4th Jul 18, 1:25 PM
    • 7,177 Posts
    • 7,128 Thanks
    eddddy
    • #3
    • 4th Jul 18, 1:25 PM
    • #3
    • 4th Jul 18, 1:25 PM
    If the land is part of the garden of your principle residence (and your total garden is less than 0.5 hectares) - you shouldn't have to pay CGT.

    But there are a number of quite 'pedantic' rules...
    • You must not have bought the property just to sell off part of the garden to make a profit
    • You must not fence off the piece of garden before the sale
    • You must not start and development on the piece of garden before the sale
    • The land must be garden - and not used for other purposes, especially not business purposes. (For example, an area used for storage probably wouldn't count as garden.)

    Some info:
    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief (Scroll down to 'Garden or Grounds')

    http://www.sestiniandco.co.uk/residence-challenges-misperceptions/


    (And if you have a mortgage, you'll need the lender's consent.)
    • G_M
    • By G_M 4th Jul 18, 1:43 PM
    • 45,874 Posts
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    G_M
    • #4
    • 4th Jul 18, 1:43 PM
    • #4
    • 4th Jul 18, 1:43 PM
    Your username suggests this might be farm land. That would have CGT implications.
    • FarmerGilesUK
    • By FarmerGilesUK 4th Jul 18, 1:46 PM
    • 52 Posts
    • 8 Thanks
    FarmerGilesUK
    • #5
    • 4th Jul 18, 1:46 PM
    • #5
    • 4th Jul 18, 1:46 PM
    Its not quite agricultural land.

    We bought the property 8 years ago with equestrian facilities attached. Since then my horse has died and we find ourselves with about 4 acres, inc riding manege, stables etc that we're not using and is costing a small fortune to upkeep.

    Someone has made me a reasonable offer for it but before I accept, I need to know if there might be any CGT pay.

    I'm thinking that's probably unlikely as in the 9 years we've been here property values haven't gone up much. Any gain would be accessed (presumably) on the land's value today minus its value 9 years ago, plus there are mine and my wife's personal CGT allowances to take off. Is that correct?

    We own everything outright btw

    Thanks folks.
    Last edited by FarmerGilesUK; 04-07-2018 at 1:55 PM.
    • agrinnall
    • By agrinnall 4th Jul 18, 1:57 PM
    • 21,415 Posts
    • 17,230 Thanks
    agrinnall
    • #6
    • 4th Jul 18, 1:57 PM
    • #6
    • 4th Jul 18, 1:57 PM
    As Qzzuk says, proper advice from a qualified professional is what you need - although if the price you're selling for is below the CGT allowance of 11,700 then you probably don't need to worry.
    • eddddy
    • By eddddy 4th Jul 18, 2:01 PM
    • 7,177 Posts
    • 7,128 Thanks
    eddddy
    • #7
    • 4th Jul 18, 2:01 PM
    • #7
    • 4th Jul 18, 2:01 PM
    We bought the property 8 years ago with equestrian facilities attached....
    Originally posted by FarmerGilesUK
    You probably need to talk to a tax specialist, who will advise on your specific case.

    Cases similar to yours have ended up in the high court, to determine whether CGT is payable...

    Dr Longson claimed that land additional to the permitted 0.5 hectares which was used to house and graze his horses was required for the reasonable enjoyment of his dwelling-house.
    ...

    And Evans-Lombe J commented in the High Court

    ...
    In my judgment it is not objectively required, i.e. necessary, to keep horses at a house in order to enjoy it as a residence. An individual taxpayer may subjectively wish to do so but that is not the same thing.

    Link: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64819
    Last edited by eddddy; 04-07-2018 at 2:03 PM.
    • FarmerGilesUK
    • By FarmerGilesUK 4th Jul 18, 2:31 PM
    • 52 Posts
    • 8 Thanks
    FarmerGilesUK
    • #8
    • 4th Jul 18, 2:31 PM
    • #8
    • 4th Jul 18, 2:31 PM
    Assessing the value of the land has been a bit of an issue tbh. You're quite right in saying that a small plot of a couple of acres is worth far more per acre than 2 acres in a lot of 800 acres (for example). However we've talked in depth to land valuers who have assessed the land at about 75-90k.

    "In theory" the value of our house will of course decrease as a result of selling the land and its amenities but:

    (1) The house and its equestrian facilities are only worth that extra money (over the top of an equivalent 3 bed property in this area) to an equestrian person.

    (2) There is a significant amount of work involved in maintaining 4 acres of pasture, manege and buildings - that has a cost.

    (3) We've struggled to sell the property for anywhere near the value suggested by local estate agents.

    (4) Selling the land off would enable us to stay here for the foreseeable future. Having to move adds its own costs of course, stamp duty etc etc.

    Presumably any GCT payable would be assessed on the lands value in 2009 vs what I sell it for, less my and my wife's CGT allowance?
    • 00ec25
    • By 00ec25 4th Jul 18, 3:00 PM
    • 7,206 Posts
    • 6,893 Thanks
    00ec25
    • #9
    • 4th Jul 18, 3:00 PM
    • #9
    • 4th Jul 18, 3:00 PM
    Presumably any GCT payable would be assessed on the lands value in 2009 vs what I sell it for, less my and my wife's CGT allowance?
    Originally posted by FarmerGilesUK
    yes, that would be the basic mechanics of the CGT calculation

    however, as others have mentioned, the chance of you being assessed for CGT looks high based on the nature and type of land. It most certainly is not covered by private residence relief (the HS283 link previously given)

    so the start point will be what it actually sells for, who you sell to may also be a factor if you sell to a "connected person". Alternatively, if you sell to a stranger then the cash price is what will be used for tax purposes.
    Last edited by 00ec25; 04-07-2018 at 5:59 PM.
    • FarmerGilesUK
    • By FarmerGilesUK 4th Jul 18, 3:02 PM
    • 52 Posts
    • 8 Thanks
    FarmerGilesUK
    I've talked to an accountant about the CGT implications and it looks unlikely that in practice we'd actually owe IR anything and given that the proceeds from the sale would be less than 3x the individual allowance (x2 as it belongs jointly to my wife and me) we wouldn't even need to include it on a tax return. I'm going to contact the people who valued it last year to try to ascertain a value for it in 2009 but I suspect the capital gain will be so small, might even be negative if I sell it for 60k.

    Thanks to everyone for their input on this.

    @ajak81 I hear what you say and in an ideal world we'd want to get the maximum for it but both of us are getting on now and trying to maintain the land is killing us. So I'll take what I can get. We've tried to rent it out but nobody seems interested (we have advertised etc).

    @00ec25 Not a connected person, just someone local who heard we were looking to sell the house and wondered if we'd consider selling the horsey facilities separately.
    Last edited by FarmerGilesUK; 04-07-2018 at 3:04 PM.
    • martindow
    • By martindow 5th Jul 18, 10:18 AM
    • 7,822 Posts
    • 4,494 Thanks
    martindow
    I think I would consider renting it out for equestrian use and put the maintenance obligations on the tenant.


    Is there any possibility that this land could get planning permission and have houses built on it? If so it is a major consideration that by selling it you will lose control of your immediate environment.



    If you do decide to sell, you could consider imposing covenants or uplift clauses.
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