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shindigger

Outbuilding Sale And Cgt

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Anybody know what the score is tax wise, on selling an outbuilding/

I have a small studio/storage room that is part of another building that runs parallel to my house.

The other bit of said building is up for sale, and ive got someone who wants to buy just my bit, effectively the last third.

This room has been very much part of my only residence, and has been a bedroom/annexe at one time since i've owned it.

I'm thinking very seriousy about flogging this bit off now, before anyone down here realises London is tanking.

Will remain in the main house for the time being however.

Think i'm covered under main residency laws but would appreciate any further comments.

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This is the HMRC's help sheet for 2013/14. I'm not aware that they've published one for the current tax year.

Private Residence Relief

Edit: The link to the CGT manual in that doc doesn't work. The section on Private Residence Relief in the CGT manual can be found here.

Edited by FreeTrader

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I think the answer is pretty clear cut, but I don't wish to give misleading advice.

To save you wading through the CGT manual, the CG64800 and CG64260 sections are perhaps the most pertinent.

CG64800 - Private residence relief: permitted area: introduction

The area of garden and grounds of a person’s residence that qualifies for relief is referred to in the legislation as the permitted area. The permitted area includes the site of the dwelling house. TCGA92/S222 (2) defines the permitted area as 0.5 hectares.

If the garden and grounds of the residence, including the site of the dwelling house, do not exceed the permitted area then relief is automatically due for that whole area.

CG64260 - Private residence relief: the entity of the dwelling house: application of the curtilage test

(Paragraph 3)

Where a building has a residential purpose but is not appurtenant to and within the curtilage of the main house, it will still qualify for relief if it lies within the permitted area of the dwelling house. This is because buildings are legally part of the land on which they stand so if the building is within the permitted area it will also be covered by relief. So you should not raise enquiries in cases where the total garden and grounds do not exceed the permitted area unless you are aware that a building has been disposed of which was not part of the dwelling house and which did not have a residential purpose.

Edit: HMRC manuals are written for its staff, so 'you' in the above quote means the tax inspector.

Edited by FreeTrader

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