New Build

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Trevor62
    replied
    I just want to avoid paying any capital gains tax on land that I valued at £99000, I'm no financial adviser perhaps I should get in touch with one. Originally I thought that If I was putting my own collateral into an investment I would be entitled to deduct the element from any future sale hence the top end valuation, but maybe this is not the case.

    The land registry require a valuation.

    Thanks

    Leave a comment:


  • pilman
    replied
    We are back to the fact that you did not pay anything to acquire the property, so what you tell Land Registry is the value only applies to the registration fee that you will be required to pay.

    It still does not mean you can value the land as though you bought it.

    Leave a comment:


  • Trevor62
    replied
    Update.

    The land registry have told me I can amend the value of the land that I had transferred, for a fee of £40,

    Any opinions would be welcome

    Thanks

    Leave a comment:


  • Trevor62
    replied
    Is it still possible to amend the valuation with the land registry or do another transfer at a lesser amount?

    I had considered renting it out though I also was considering to have the property as a second home.

    At this stage I did not want to be tied to a buy to let situation, I am wanting to give my properties to my children before I pass and I want them to not have to engage probates or solicitors.

    If I sold it too myself to realise its value would that not also attract a stamp duty tax?



    Leave a comment:


  • pilman
    replied
    If I use the new build as my place of residence and change the original property into a let would that put the CG tax on the other property?
    After reading that last sentence, my immediate thought was to say "That's the way to do it", which immediately started me thinking that I had heard that phrase before.
    Then I remembered my childhood experience of seeing a Punch and Judy show at the sea side, which may not mean much to someone a lot younger than me, but in this case what Punch shouted every time he hit Judy with a big stick is the most appropriate response to Trevor's last posting.

    In his case taking that advice will finally remove the problem of paying far too much tax after not realising the serious consequences of gifting a piece of land to an individual who intended to build a new house on the land, should it be the intention to sell the land once a house was erected on it.

    Now that it seems probable that the existing house is the main residence it will make sense to build the new house and move into it as the new main residence.

    That will allow the existing house to be rented out and only then would the possibility of paying CGT arise some time in the future when the original house came to be sold.

    It may even be sensible to have the existing house valued by a local estate agent to estimate its current value now that some of the land has already been transferred.

    That valuation could then be used to identify any increase in value if the original main residence was to be rented out after the new house had been moved into as the new main residence.

    I believe that the existing value would relate to future liability to CGT based on ownership of a second property, although a sale of the original house, as soon as the new house had been moved into, would result in there being no tax liability at all when a main residence is sold to realise capital.
    It could even be sold to Trevor at a suitably high price, so that it clearly establishes the value when the house is then rented out as an investment property.

    Paying the Land Registry fee is also deductible should the house be sold sometime in the future after being rented out.
    Of course so much depends on whether the second owner is prepared to be part of the future dealings with the rented house.



    Leave a comment:


  • Trevor62
    replied
    So basically I have made an error in valuing the land at £99000 ? If that is the case can this be amended ? Or If I use the new build as my place of residence and change the original property into a let would that put the CG tax on the other property?

    Leave a comment:


  • pilman
    replied
    It seems that you and one other person owned a registered title.
    When the land was transferred to those two people in Section 11 of the TR1 form a cross was placed next to the box that stated "they are to hold the property on trust for themselves as tenants in common in equal shares"

    That would be why the standard form of Restriction was included on the register of title when it was issued with the two named people shown as Registered Proprietor.

    If one named person dies then their share can be bequeathed in their will to whoever they chose to be the new owner of the half share in the property.

    When part of the land was transferred to the single person named on the TP1 transfer deed both of the registered proprietors had to sign that deed to make a legal transfer.

    The new title is owned by a single person who can deal with the land in the new title however he chooses to deal with it.

    The value of that land for the purposes of making an application to Land Registry was estimated as £99,000, but no money was paid for the transferred land.

    If this land was now to be sold by the single owner it would result in a Capital Gain of the entire selling price, less the cost of any fees paid to a solicitor or an estate agent after the annual CGT exemption of £12,300 was applied.

    e.g. Land sold for £99,000 as a building plot less solicitors fee of £700 and estate agents fee of £1,500 would give a Capital Gains tax value of £96,800.
    Less annual allowance of £12,300 leaves a taxable amount of £84,500 that will be taxed at 20%, because it is bare land.

    If a new house was built on the land the cost of the building would be deductible, but of course the value of the property would then be increased quite considerably.

    e.g. New house sold for £300,000, less cost of build at £150,000, less solicitors fee of £700 and estate agents fees of £4,500 will give a taxable amount of £144,800.

    This could now be considered as a profit rather than a capital gain, so higher rates of income tax will apply after deducting the £12,500 personal tax allowance.

    In each of those examples the land value was the amount you paid for it, which was NIL.

    Leave a comment:


  • Trevor62
    replied
    I just had a thought, the garden that has been transfered is still on my leasehold so is this why I have:

    21.06.2017) RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.?


    Thanks

    Leave a comment:


  • Trevor62
    replied
    Originally posted by pilman View Post
    When there are two or more people who are named as registered proprietor and are shown to be tenants in common, so that each owns a share of the freehold, that restriction is included in the register of title.
    If one tenant on common died leaving a single named proprietor, that person cannot deal with the other person's share without legal authority.

    When two or more people who are named as registered proprietor are stated to be joint tenants then the survivor is entitled to dispose of the property.

    Section 11 of the TP1 form includes these words, which require a declaration as to what type of ownership is being registered.
    11 Declaration of trust. The transferee is more than one person and
    they are to hold the property on trust for themselves as joint tenants
    they are to hold the property on trust for themselves as tenants in common in equal shares
    they are to hold the property on trust:
    I dont entirely understand this but I hope if I do decide to sell that I will not be hindered.

    The transfer fee was £40 and the value of £99000 was the top end of what I could put, I just wanted to try to reduce my capital gains with this figure, although no money changed hands my value of my property now without a garden has lost value so doesnt this mean that any profit made on the new build have to take into account the land value that does not have a capital gains element so should not be combined with to overall value of any sale?


    B: Proprietorship Register This register specifies the class of title and identifies the owner. It contains any entries that affect the right of disposal. Title absolute.

    Ok my name only is named as the PROPRIETOR, the land use to be on a shared freehold but I instructed my solicitor to take if off to create a separate freehold title, so what does this mean to me if I die and leave this land with new build on it?


    (21.06.2017) RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.

    The above was dated 21.06.2017 at that time the land was jointly owned but see this :

    (12.01.2021) The Transfer to the proprietor contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof.

    So the transfer took place 12/01/2021 so does this mean that :

    (21.06.2017) RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.

    does not apply?

    Am I still a joint owner?

    I am now confused.

    Thanks

    Leave a comment:


  • pilman
    replied
    Ok so why did I have to put a value on this land ?
    In order to calculate the fee due to Land Registry when an application was made to register the new owner.
    The application fee is based on the value of the land transferred even if it was given away.

    Leave a comment:


  • Trevor62
    replied
    Originally the land formed part of a freehold that is shared, with agreement from the other freeholder they allowed me to take my side garden off the freehold to create a separate title in my name only. There was no money changing hands and my solicitor advised me that I had to put a value on the land which I did. The maximum that I could put was £99000, I put this value thinking that this amount would be deducted from any future sale as I had already owned this part of this asset. There has been no value showing anywhere other than the leasehold title which shows the amount I had paid for the leasehold property with the building .

    I had already got planning permission before I divided the land, the actual land value is unknown to me I chose the value of £99000 hoping this would be deducted from any future profit.

    The TP1 section 9 : The transfer is not for money or anything that has a monetary value.

    Ok so why did I have to put a value on this land ?

    Thanks

    Leave a comment:


  • pilman
    replied
    When the land was transferred was the value of £99,000 shown as the consideration paid for the land.

    If the land value was shown as the consideration in section 9 of the TP1, then if it was part of the residential garden of the main residence occupied by you, there will be no CGT tax to pay.

    Then the value of £99,000 will be deductible along with the cost of building the house and all the other fees for planning and services when the house is sold after completion.

    If section 9 of the TP1 form did not show a consideration, then since the land had no value there is nothing that can be deducted.

    Leave a comment:


  • Neelix
    replied
    Originally posted by Trevor62 View Post
    I have planning permission to build a 2 storey house and yes I do expect if I did sell with house built that I would be up for C & G though first you have to deduct your costs and I have valued the land at £99000 so shouldn't that be deductible from a sale price as I already paid for that land which will now devalue the property that it was once part of.
    Was that the value with or without planning permission?

    The value of your adjoining property, AFAIK is irrelevant

    Leave a comment:


  • pilman
    replied
    (21.06.2017) RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.

    What does this mean?
    When there are two or more people who are named as registered proprietor and are shown to be tenants in common, so that each owns a share of the freehold, that restriction is included in the register of title.
    If one tenant on common died leaving a single named proprietor, that person cannot deal with the other person's share without legal authority.

    When two or more people who are named as registered proprietor are stated to be joint tenants then the survivor is entitled to dispose of the property.

    Section 11 of the TP1 form includes these words, which require a declaration as to what type of ownership is being registered.
    11 Declaration of trust. The transferee is more than one person and
    they are to hold the property on trust for themselves as joint tenants
    they are to hold the property on trust for themselves as tenants in common in equal shares
    they are to hold the property on trust:

    Leave a comment:


  • Trevor62
    replied
    I have planning permission to build a 2 storey house and yes I do expect if I did sell with house built that I would be up for C & G though first you have to deduct your costs and I have valued the land at £99000 so shouldnt that be deductible from a sale price as I already paid for that land which will now devalue the property that it was once part of.

    Leave a comment:

Latest Activity

Collapse

Working...
X