Moonshine Posted December 7, 2017 Share Posted December 7, 2017 I am looking at developing the plot that my house existing is currently on, into two plots with two houses (A/B). One of these would be for us and the other would be sold (i have rough site plans if it helps). We currently have about 50% equity in the existing plot / house. I am having issues in working out how to phase the development in relation to funding, and wonder if anyone had any thoughts? House B can be arranged and built so that were can live in the existing house whilst it is being built, but the existing house will need to be demolished to make way to build house A. It is our end goal to live in house A. Our initial thoughts are to build house B and live in the existing house until ready. When house B is complete move in there (for 12 months) and demolish the existing house and build house A. When house A is ready sell house B and move into house A. The issue arises is how to fund the process, are we able to go the self-build mortgage route or would we need some sort of development loan type hybrid? Also what are the potential tax implications of doing this way? Link to comment Share on other sites More sharing options...
Mr Punter Posted December 7, 2017 Share Posted December 7, 2017 There are tax implications in doing as you suggest and unless you are an experienced developer I would suggest selling the plot for house B and using the tax free proceeds either to build the proposed new house or to live mortgage free. 1 Link to comment Share on other sites More sharing options...
ToughButterCup Posted December 7, 2017 Share Posted December 7, 2017 2 hours ago, mike m said: [...] Also what are the potential tax implications of doing this way? I am almost sure you will not be refunded your VAT. Link to comment Share on other sites More sharing options...
ProDave Posted December 7, 2017 Share Posted December 7, 2017 Surely the simplest is divide the plot. Sell one plot (your old main residence so no CGT?) Build new house to live in and reclaim the VAT. I think as soon as you start along the road of build 2 houses you become a "developer" and different rules apply. So the issue becomes either how to fund building the new house before you sell the old one? or sell the old one first then where to live while building the new one? Link to comment Share on other sites More sharing options...
jpinthehouse Posted December 7, 2017 Share Posted December 7, 2017 We were looking at doing the same but we are going to build the new house for ourselves and sell the old house we spoke to an accountant they said we would have to pay tax. The mortgage company would not lend us the money classed us as commercial. Two houses on one planning application, so we split the application 2 Link to comment Share on other sites More sharing options...
Moonshine Posted December 7, 2017 Author Share Posted December 7, 2017 thanks for the input and its not as straight forward as i hoped. JP, could you provide any more details of how you went about things? Cheers Link to comment Share on other sites More sharing options...
Naz Posted July 22, 2023 Share Posted July 22, 2023 @jpinthehouse, so you literally had 2 separate planning applications, 1 for each house? did you get them granted? Would it have been a problem, if both houses were under 1 planning application? Link to comment Share on other sites More sharing options...
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