Building a 2nd home.

[90210]

Just wondering if anyone has done this , I own (married) a private residence with a good corner site. I am looking to build on the corner site , i have been told that building will not be a problem due to the proposed design and precedents sets in the area.

When the second property is built my intentions are to sell my old house and move next door into the new house.Both property's will be seperate legal entities with their own grounds and boundaries, but would i be liable for CGT and at what stage. Or has anyone got a suggestion on how best to proceed in order to reduce tax liability.I know i can sell my private residence and not be liable for anything, bar costs, i will also be in a position to move into a temporary arrangement while the building is being completed.
I will be taking out a short term loan in order to fund the construction , until other funds are released.

 

[Betsy Og]

You should sell your current house before moving into the new one- assuming you've lived there all the time you've owned it then no capital gains tax. Its fairly straightforward. The tricky bit might come if you were on your 3rd of 4th PPR and Revenue might argue you were conducting a trade.

 

[DarraghDuane]

I think that the comment on being deemed to carry on a trade needs to be put into context. If you have been a homeowner for 20 years and have lived in 4 different houses then there is no danger. It might be a different story if you owned 4 different houses in the last 2 years.

If you sell the house, rent and then move into the new house there is no CGT problem. Also, if you build the new house and move in, you can still hold onto the first house for another year before selling without affecting your CGT principal private residence (PPR) relief. The last 12 months of ownership are deemed residence for the PPR relief, I'm not aware of this 12 month deemed residence being affected by you moving into a new principal private residence.