Son wants to help his mother downsize but also make a sound investment. Any way around this interesting property investment conundrum?

[Tom Smith]

18 hours ago, iSelfBuild said:

This chap will help you out and give sound advice - https://www.samhawking.co.uk/

Many thanks!

[Mr Punter]

33 minutes ago, Tom Smith said:

As for selling the garden plot separately along with the planning permission, apparently that would be seen as "speculative" by HMRC and therefore there may well be a tax liability.

 

I understand that you would only be liable for CGT if the total plot is over half a hectare.  What tax did HMRC have in mind?

[Tom Smith]

Just now, Mr Punter said:

 

I understand that you would only be liable for CGT if the total plot is over half a hectare.  What tax did HMRC have in mind?

Oh that's very interesting!  I didn't know that! It's certainly much less than half a hectare. I was mistaken and it seems that my Mother could sell the land (with planning permission) and still be able to claim PPR relief.

 

I was getting confused with another scenario: ie. you build a  new house on your land and sell the completed property. This could be viewed as a trading activity, meaning at least part of the profit realised is subject to Income Tax and not Capital Gains Tax.

[newhome]

46 minutes ago, Tom Smith said:

there is even a grace period of 2 years (?) to make the switch?

 

18 months currently but moving to 9 months in April 2020 I believe. 

 

Capital Gains Tax

 

The property won’t be your main residence I assume so your liability may kick in straight away.