Home Truths – selling property to a house builder

Rob Durrant-Walker and Alex Millar consider the tax issues when a client sells property to a house builder in Taxation magazine.

(Full article here)

There are myriad considerations when a client sells land, buildings or both to a developer. These cover capital gains tax, VAT, stamp duty land tax (SDLT), land pooling and annual tax on enveloped dwellings (ATED) for both parties. At a basic level, Build Ltd may approach a client with a view to purchasing property without planning permission. The price offered will reflect the cost of applying for consent and the risk that this may not be granted at all or may be granted with onerous conditions and restrictions. The price may be acceptable to the client, especially if the client had not previously thought about selling.

At the other end of the spectrum a client may realise that their property could be worth much more if they could obtain planning permission and thereby interest several house builders in buying it, perhaps with neighbouring property owned by other parties. In this case, the client could incur significant professional fees, possibly over several years, on activities such as obtaining planning permission and promoting the site, including VAT on a promoter’s cut.

Read the full article here for more on VAT planning, SDLT and ATED.