CGT Liability - House in Garden

Hi there

A family member has had a house as a rental property for a number of years.

They managed to get planning permission to develop a house in the side garden which they have built and are now in the process of selling.

I would have thought the tax liability would be broadly 20% of the sale proceeds less the cost of construction (and other costs such as selling costs etc)

Does anyone know if this is correct?

Additionally - Is there a further allowance for the purchase price of the land in the first place ( some proportion of the cost of the original property)? If so, would there be an indexation allowance?

Any help much appreciated.

Additionally - Is there a further allowance for the purchase price of the land in the first place ( some proportion of the cost of the original property)? If so, would there be an indexation allowance?

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Yes, afaia most estate agents are capable of putting a value on a garden, when the house was originally bought, that is later sold once they know the total value of the property. Again afaia revenue accept this figure.
When the remainder of the property is sold you can only use the remainder of the value as the cost, you can't get it revalued, revenue will pick up on this or at least they should. In other words both purchase values (the investment property and the new property now being sold) should add up to the actual purchase price of the original property.
Hope this makes sense.

If the property was purchased prior to 2002 then indexation can apply.

See here - Appendix 1

asdfg said:

Yes, afaia most estate agents are capable of putting a value on a garden, when the house was originally bought, that is later sold once they know the total value of the property. Again afaia revenue accept this figure.
When the remainder of the property is sold you can only use the remainder of the value as the cost, you can't get it revalued, revenue will pick up on this or at least they should. In other words both purchase values (the investment property and the new property now being sold) should add up to the actual purchase price of the original property.
Hope this makes sense.

Click to expand...

What about part-disposal rules?

The OP should get proper professional advice.