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If I were to convert my home into two separate dwellings, and live in one and sell the other, what would my tax liability be?

(12 Posts)
Scrumplet Wed 22-Jul-09 12:18:52

I think that if you sell off a portion of your garden as a plot for a new-build, you don't pay tax (I think - could be wrong). I'm wondering if/how this differs if you divide your house in two and sell off half as a separate property.

Thanks if anyone can share any know-how with this.

Scrumplet Wed 22-Jul-09 13:49:19



VulpusinaWilfsuit Wed 22-Jul-09 14:00:39

I don't know but would be very surprised if you weren't liable for capital gains later upon selling it.

Why don't you ring the Inland Revenue helpline and ask them direct?

Scrumplet Wed 22-Jul-09 15:16:04

Thanks, Vulpusina. I'm just not sure. As far as I know, you're not liable if you sell off a bit of your garden - because personal homes are exempt from capital gains. I would be converting and selling of half of my personal home. It's a grey area. I've looked in the phone book for the right HMRC number to call, but no helpline covers this. I'll pop on their website now DS isn't gaming! Thanks again.

VulpusinaWilfsuit Wed 22-Jul-09 15:33:33

Yes but it would no longer be your main residence would it?

I don't know what the legal/registry implications are either. I think you need expert advice.

CowWatcher Wed 22-Jul-09 15:38:03

you would also need planning permission.

ChasingSquirrels Wed 22-Jul-09 15:43:15

The garden situation isn't cut and dried, it depends on the size of the garden, and use and enjoyment.

Splitting a house, I guess up till the point you split it then the entire house is your ppr.
Once split (and properly registered as 2 separate residences) then only one can be your ppr.

My thinking would be that the bit that isn't your ppr would have ppr for the time it was (when you brought to date of conversion) and non-ppr after that. So the longer you hold after conversion the more you will be liable for CGT. But then you have annual allowance.

Just gut feel though, no case law to back up.

CarGirl Wed 22-Jul-09 15:51:23

perhaps you get the planning permission first and then get someone to buy half of the whole house and then after conversion you split ownership or something.

Only think that would work if it were a family member doing it with you IYSWIM.

SingingBear Wed 22-Jul-09 15:52:59

Message withdrawn

MrAnchovy Wed 22-Jul-09 16:24:28

Be aware too that there are VAT issues: costs which qualify under the "changed number of dwellings conversion" rules should incur only 5% VAT.

Make sure that whatever professional(s) you instruct (solicitor, accountant, PQS) is/are able to advise on this as well.

Scrumplet Thu 23-Jul-09 00:10:35

Really useful posts. Thank you all.

I do need to involve the planners, yes - and a solicitor, the Land Registry, a surveyor, etc. Of all these specialists to speak with and details to work out, I have decided first to find out how the financials stack up, since the CGT issue will largely determine whether or not I can do it. Also, I don't want to risk ruffling my lovely neighbours' feathers a bit with a public, full planning application until I know it's financially and fiscally viable and worth getting them involved.

So getting my head round the tax implications is really my first hurdle. (I do have an informal proposal in with the planners too - which doesn't involve going public with the neighbours - which has been well-received and I'm just waiting on Highways to give me their view on access, parking, etc.)

SingingBear, that's an especially useful post. Thanks.

SingingBear Thu 23-Jul-09 20:21:53

Message withdrawn

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