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Submit plansIn Dec 2012 I bought a build plot and started work on it in Jan 2013. The build took 2 years and I moved in in April 2015.
During the build phase I didn't own another property and so rented a house for the duration of the build phase, until the last 6 months when I lived in a caravan on site.
I lived in the property from completion in April 2015 to 2022 when I sold it.
My question is this....given that I didn't own another property at the time of building my home, is CGT applicable and if so, what is the calculation used for determining the amount owed?
Thank you in advance.
Hi Gemma,
Unfortunately, as the build period took more than two years, it looks likely that it will not qualify for private residence relief. More information can be found here:
i. https://www.legislation.gov.uk/ukpga/1992/12/section/223ZA
ii. https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65000.
iii. https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2022
The gain will be calculated pro-rata, so if you sold the property in December 2022, that makes the period of ownership ten years or 120 months. The disallowed period is 28 months, so the exempt gain qualifying for private residence relief is 92/120.
However, I am not a specialist tax adviser, and therefore I would highly recommend seeking professional advice, as there may be considerable sums involved.
If you choose not to get professional advice, then it’s important to do a lot of research to ensure you understand the complexity of the rules surrounding tax on a property, as there may be a number of factors which haven’t mentioned in your query that would significantly change the advice you receive (such as business use of your home, or buying a property with the intention of making a gain).
You also need to be sure that you are reading the tax law in place at the time you undertook the transaction, as the law changes regularly.
Katherine Taylor (Build It’s Finance Director)