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NuBrit

Extend, Or Buy.

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Have had an interesting proposal recently, looking for some opinions.

A relative of my wife died recently, and as part of the execution of his will, his house has been offered to my wife for £60k (RV is £95k). The house itself is in north Armagh, is a detached bungalow, 80sq/m, 3 bedrooms (third bedroom is really a closet) with about 3/4 of an acre. House would need almost complete renovation and modernising. Layout is kinda like so (spaces stand for doors!).

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Basically, what we're thinking of doing is turning the bathroom into a hallway, the box bedroom into a bathoom, and then extending out the back, tacking on two bedrooms, I'm thinking that adding 40 sq/m should be enough for the new two rooms. On top of that, we'd be looking at a new kitchen, new bathroom, possible rewiring, oil heating installed, flooring put down, insulation, etc.

Question I'm asking is, has anyone looked into doing something similar, or knows what sort of building costs would be involved here? Could this be one of those instances where you would be better off saving yourself the heartache of refitting, and just buy an existing place and end up spending the same money?

Edited by NuBrit

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With a rebuild you get what you want and no VAT - 20% from next year!

With a re-model/extension project - having to work with what's there. Bit more of a compromise, still plenty of hard graft/stress and costs - including VAT.

Depends what you want. Talk to local planners and have a chat with an architect & get an idea of what might be possible/costs with either scenario is the only way to make your mind up.

With a plot like that I would demolish & build something fab.

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The thought of knocking it and rebuilding had occurred to me, although I was warned that planning would be more difficult in that circumstance. Also, the rough cost of a 100sq/m house with a builders finish would be £100k and it would take another £20k to fit it out, bringing the total cost to £180k, not exactly cheap. By just extending the house that's already there (build quality of existing structure is quite good), I half the cost and still have the same floor space. Have to say I am disappointed that the building costs are still quite high, so much for the recession!

Live near by and have some building skills (could dig the trenches and lay foundations myself). Wouldn't touch the blockwork, but could rewire the house and do any tiling too.

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With a rebuild you get what you want and no VAT - 20% from next year!

I'm not sure what the building industry is like but, in order to not pay vat you have to employ directly lots of small builders whose revenue is less than 70K or so. That means you really have to have building knowledge yourself, do the project management, you are probably dealing with sole traders, and half of them have no insurance. You have little come back if someone ff up.

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I'm not sure what the building industry is like but, in order to not pay vat you have to employ directly lots of small builders whose revenue is less than 70K or so. That means you really have to have building knowledge yourself, do the project management, you are probably dealing with sole traders, and half of them have no insurance. You have little come back if someone ff up.

On all materials that you buy you pay VAT. It makes no difference if it is new build or refurb. And certainly makes no difference on the size of the contractor (unless it is the old black market). You pay VAT at source if you are doing it yourself.

New build is rated at zero and therefore you are entitled to claim back the VAT. You get one go at this and must be done after completion and within 3 mths of completion. You can download a very good pack from the VAT website on this subject.

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Just thinking about this;

Are there more parts to the will or was this the only asset? Not sure what the figure is but £275k, sticks in my head. If the total Will value is worth more than this then inheritance tax may be due. Remember this is still the case even if the asset you are receiving is well below the threshold. If the combined estate of over the threshold then the estate is taxed and you may have to contribute. You are perhaps lucky to only receive this now. If the owner of the estate had of passed away at the height of the boom the estate would be valued at that time and 3 years later (I think) you would have to pay the tax based on that value). Nasty business death tax.

I am no expert and if there are more assets in the estate seek expert advice.

Edited by BelfastVI

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On all materials that you buy you pay VAT. It makes no difference if it is new build or refurb. And certainly makes no difference on the size of the contractor.

It certainly does, see my post, it is correct and a simple rule of vat which I have used as a sole trader.

It may indeed be difficult to source materials from such a small manufacturer, and your vat free sole trader will have to pay vat to buy them as he will not be vat registered to net it off.

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  • 312 Brexit, House prices and Summer 2020

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      • down 5% +
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