PPR Relief On The Sale Of Part Of Your Garden
It could help fund your retirement ...
As I sit here contemplating the fact that I will have to wait until I am 68 to receive my state pension (I suppose I should be grateful I am getting something!) I am contemplating how I will fund my retirement ...
If you're looking to fund your retirement, then selling part of your garden may be ideal!
copyright: casanowe / 123rf stock photo (licensee)
I am an advocate of using personal pensions to fund retirement, but appreciate that most of us can't afford to put the recommended amount into our pensions, and therefore won't have enough to sustain ourselves into retirement.
"With most of our wealth being tied up in our homes how can we realise some of this value?"
One of the ways that you may want to consider is to look at selling off part of your garden for development. But if you do this what are the tax consequences?
When you sell an asset, you may be subject to Capital Gains Tax (CGT) on any gain made, subject to the annual exemption. However, one of the many valuable reliefs available is Principle Private Residence (PPR) relief. PPR relief is available against CGT when an individual sells a property that has at some point been their main residence.
"But what if you are selling
part of your garden?"
PPR relief is also given in relation to any land which you have had for your (to quote the legislation) "own occupation and enjoyment with that residence as its garden or grounds up to the permitted area".
Therefore your garden is potentially eligible for PPR relief. This means PPR relief may be available on a sale of part of the garden without the sale of the house.
Care must be taken as the land must form part of the garden of the residence at the date of the sale. If the house is sold first and then the garden PPR relief will not be available on the sale of the garden as it is no longer part of the residence.
'The permitted area' is currently up to 0.5 hectares, including the site of the dwelling. But if the area 'required for the reasonable enjoyment' of the dwelling house as a residence - having regard to the size and character of the house - exceeds 0.5 hectares, then the 'permitted area' can be increased accordingly.
The gain on the disposal of part of a garden outside of the permitted area may still qualify, even where the aggregate area exceeds the 'permitted area'. However, HMRC's published view is that this land wasn't required for the reasonable enjoyment of the property, if it can be sold separately without significant adverse effect on the use, or marketability, of that main residence.
Maybe it's a financial necessity, or you're not able to maintain the garden due to ill health anymore? Both may prove to be acceptable arguments although fencing off the area prior to sale should be avoided.
"As the amounts involved can be significant and, as with all reliefs, the rules are complicated, tax advice should always be sought!"
If you'd like to talk to me about PPR Relief, Capital Gains Tax or anything else to do with your tax situation, call me on 0333 335 0427 or click here to send me an email enquiry and let's see how I can help you.
Until next time ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen’s specialist knowledge in tax planning and experience ensures every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.