Buying house that has site attached

P

pkelly03

Guest
Hi,

I'm considering purchasing an old house that has full planning permission
for a 3 bed house to the side. I'm just not sure about any tax implications that may arise. I'm buying with a view to selling the two on when the house to the side is built.

The house is 650k,

Stamp duty is for the house site is 60k. And council contributions are 11k. Can these be offset against CGT? I had a read of the 'Guide to Capital Gains Tax' booklet on the revenue website. From this I'm confident that I can offset homebond, marketing fees and banking charges etc. But I wasn't sure about stamp duty or council contributions.

I heard somewhere that you can delay paying stamp duty?

Also, if i was to sell off one of the houses after the property was built, what way would you work out the cgt.

For example if the property was 650k and I sold one of the houses for 400k, thats a 250k loss.

I assume you would have to divide up the 650k - part site.

650k / 2 = 325k.

So it would be : 400k - 325k = 75k - build/marketing costs @ 20%.

Any help much appreciated.

Paul
 
Not sure about the Stamp Duty or council charges


AFAIA the folio (property) is split and a market value is put on each. I'm sure a value from an estate agent would be acceptable.

The house would probably be valued at say 500K and the site for the new house 150K

Sell the new house for 400
less site valued 150
less costs in the purchase, splitting the folio including legal & auctioneers fees (apportioned) and sale costs in selling new house
Less build / marketing costs
Less 1,270
Balance @ 20%
 
If you sell the new house when its built, you might be liable for paying VAT and also an income tax rate of 42% rather than capital gains tax. As revenue could decide you are a developer. I looked in to doing something similar and this is what I was told.
 
I'm contemplating something similar and am also wondering whether you can write stamp duty and development contributions to the local councils off against CGT. Does anyone have any thoughts?
 
AFAIK you can only write off stamp duty that you paid in relation to the site only and the delopments contributions to the local councils. These would be considered improvements.
I am not a tax or legal advisor so get specialists tax advise before continuing.
 
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