Buying neighbours' gardens to develop- tax?

[JDO]

My rear garden extends to approximately half an acre of land.

I have agreed in principle to buy some of my neighbours land that will increase my total land ownership to about one acre.

I would like to develop the land and build residential property on it.

Before I commit to anything official does anyone know what the tax implications would be if I proceeded...?

As yet I have not agreed to or signed anything.

Any advice would be appreciated

John

[Tax Accountant]

My rear garden extends to approximately half an acre of land.

I have agreed in principle to buy some of my neighbours land that will increase my total land ownership to about one acre.

I would like to develop the land and build residential property on it.

Before I commit to anything official does anyone know what the tax implications would be if I proceeded...?

As yet I have not agreed to or signed anything.

Any advice would be appreciated

John

Will the land next door become part of your garden?

What will happen to your current home?

Will the new house and it's garden be on existing garden or newly acquired garden or both?

What will you do with the house you intend to build?

If you buy or build anything with a view to making profit on disposal, you will not get PPR relief.


Ramnik

[JDO]

Hello Ramnik, I will try to answer your questions as best I can...

1. Yes, the neighbours land will become part of my garden.

2. My existing home will probably need to be demolished to gain access to the development land.

3. The new houses will be built on both gardens.

4. When complete I would sell each house for a profit.

Hope this helps

John

[Tax Accountant]

Hello Ramnik, I will try to answer your questions as best I can...

1. Yes, the neighbours land will become part of my garden.

2. My existing home will probably need to be demolished to gain access to the development land.

3. The new houses will be built on both gardens.

4. When complete I would sell each house for a profit.

Hope this helps

John

Your capital gains tax situation will be complicated regarding your existing house and gardens. They will be exempted if you sell but you may lose the CGT free gains if you demolish with a view to make profit.

There is also a risk that you may be deemed a developer and any developement profits taxed to income tax rather than Capital Gains Tax.

You are best to seek professional advice before proceeding.

Ramnik

[JDO]

Hello Ramnik

Thank you for your helpful & detailed reply

Cheers

John

[Tax Accountant]

Hello Ramnik

Thank you for your helpful & detailed reply

Cheers

John

You are welcomw.
Pay it forward
Ramnik