New announcement. Learn more

News and advice to help make your business a success

LANDLORDS FINANCIAL BLOG

All

Landlords Tax Property Tax Landlords Tax Returns Property Accounts Property Tax Return Landlords Accounts Chartered Accountants Online Accountant Online Bookkeeping Online Tax Returns Tax Returns Your Online Accountant Your Online Bookkeeper Businessadvice Accounting Cashflow Smallbusiness Tax Businesstips Property Accountant Taxplanning VAT Furnished Holiday Lettings Inheritance Tax Property Property bookkeeper Annual Exempt Amount Capital Allowances Capital gains tax property Compliance Deductibleexpenses Employment Allowance Finance Financialmanagement Holiday Lets Tax Landlords Accountant Landlords Financial Making Tax Digital Mileage Allowance Mobilephones Pension Ppr Property Company Tax Property Tax Deductible Expenses Rent a Room Relief Small Business Taxreturn TimetoPay VAT invoice 60 day capital gains limit Accrualsbasis Acquisitions Advisoryfuelrates AI AirBnB Allowable Business Expenses Alphabet shares Amap Annual Tax on Enveloped Dwellings Appeal Assessment Asset disposal Associated Company Associated Company Tax Rules Bad Debt Bad Debt Tax Relief Baddebts Badgesoftrade Beancounter Benefits in Kind Breakeven Point Budget Business advice Business asset deferment Business coach Business Continuity Business Entertainment Business Expenses Business Rate Business Rates Relief Business tips Businessgrowth Businesstypes Buy or Lease Equipment Buytolet Capital Allowances for Cars Capitalallowances Car Capital Allowances Carry Back Losses Cgt Change of Tax Basis ChatGPT CIS Scheme Common Tenant Companies Expenditure Companies House Company Account Deadlines Company Account Filing Company Strike Off Company Tax Efficient Property Compulsory Strike Off Construction Industry Scheme Contacthmrc Contentmarketing Corporation Tax Losses Corporation Tax New Regime Corporation Tax Rates CorporationTax Costs Cryptocurrency Deductible Business Expenses Depreciation Development Directors Directors Loans Directorsloans Disallowable Business Expenses Discovery Disincorporation Dividend allowance Dividend Allowance Reduction Dividend Planning Dividends DLA Domestic Items Tax Relief Employee Discount Employee management EmployeeOwnershipTrust Endoflifeplanning Enquiry EnterpriseResourcePlanning Entrepreneurmindset Equity Expenses Expenses Allowed For Tax Eyetests FHLs Flipping Furnished Holiday Lets Tax Gift Aid Growthhacks Help to pay tax bills HMO Licensing Fees HMRC complaints Holiday Lettings Tax How to apply for a Business Loan How to Extract Profit Humour Ihtexemptions Illegaldividends Inheritance Tax Nil Rate Band Investment Property Tax Joint Tenant Landlord Repairs Landlords Self Assessment Late vat registration LBTT Leadgeneration Leadmagnet Leanbusinessmodel Letting Agent Disbursements Letting Agent Recharres Lettings Relief Limitedcompany Long Lets Tax Longservice LTT Mainresidencerelief MakingTaxDigital Managed Lets Management accounting Mileage payment Minimumwage Mixedusesdlt Mortgage costs Mortgage Interest Relief New property Newcompanycarfuelrates Newnicrules NIC 2023 to 2024 NIC savings Non-taxable Optiontotaxvat Overlaprelief Overpayment Relief Partnership Partnershipbusinesses Parttime PAYE PAYE by Direct Debit Penaltypoints Pension Payments Tax Relief Performance-reviews Periodsofabsence Personal finance Personalallowance Personalguarantees Profit Profit-and-loss Property Allowance Property Development Company Property Incorporation Property Investment Company Property investor accounts Property investor tax tips Property Letting Property Rental Business Property Trading Propertyallowance Recharges by Estate Agents Regularpayments Reimbursedexpenses Rent your drive Rental Rentaroom Research & Devolopment Residence Relief Residential property gains Retail stock control Retainedprofits Room for rent tax SA Salary SDLT SDLT changes Section 455 Tax Selective Licences Landlords Self Assessment Self-employednic Selfemployed Seperation Servicecharges Simplified Expenses Smallbiz Smallbusinessraterelief Software Spring Budget Stamp duty SuccessJourney Tax Allowance on Driveways Tax Allowances Tax Deadlines Tax Filing Deadlines Tax Free Childcare Tax free income Tax on Company Vans Tax position Tax Relief Tax tips for landlords Taxbillpayments Taxconsequences Taxincentives Taxposition Taxreliefs Taxses Terminationpayments Tips Trade professional Transfer Assets Transfer Assets Between Spouses Unpaid Rent VAT Bad Debt Relief VAT Deadlines VAT Disbursements VAT Penalties VAT registration Vatpenalties Vatregistrationthreshold Wellbeing

TAGS

Selling the garden for development

July 2, 2023

Selling the garden for development

If you own a large plot of land that you no longer require but you don’t want to move home, you may consider selling some of it for development. However, from a tax perspective, there are considerations that you need to be aware of up front.

Selling the garden v developing the garden

There is a difference from a tax perspective betweenselling some of your garden to a developer and developing the land and then selling the property or properties that you have built on the land.

If you sell part of your garden but the attached property is, at the time of the sale, your only or main residence (or has been at some point), you may be entitled to private residence relief on any gain that you make on the land. This is a huge plus as it may mean that there is no tax to pay.

What counts as a ‘garden’?

Private residence relief is available for a property for the period for which it has been the owner’s only or main residence, and also this test has been met at some point, for the last nine months of ownership. The relief also applies to land which is occupied and enjoyed by the owner with the residence as its gardens or grounds up to the permitted area. The ‘permitted area’ is set at 0.5 of a hectare. However, a larger area may be allowed within the scope of the relief where this is deemed to be reasonable having regard to the size and character of the house.

To qualify, the land will generally be enclosed land surrounding or attached to the property which is used chiefly for ornament or recreation. Land that is let out or used for a business does not qualify for the relief, nor does land which at the date of disposal has been fenced off for development.

Order of sale

If some or all of the land is sold separately, it will only qualify for private residence relief if the disposal is made at the time the property eligible for main residence relief is still owned. Once the main residence has been sold, the land is no longer ‘enjoyed’ with the main residence and the relief is not in point. The test is applied at the date of sale.

Development first

Care should be taken if the plan is to develop the garden yourself. Private residence relief is not available if you have fenced off part of your garden to develop it or the development work has commenced. The land will no longer be part of the garden and enjoyed as such as the main residence.

Any value arising from the development is likely to be taxed as a trading profit. However, any gain up to the point when it ceased to be used with the main residence may be liable to capital gains tax.

Mainresidencerelief

Development

Landlords Tax

Landlords Accounts

Landlords Tax Returns

Property Tax

Property Accounts

Property Tax Return