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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Private residence relief: garden and grounds: land disposed between contract and conveyance

There may be some uncertainty about the availability of relief for land which is disposed of in a separate contract in the period between the date on which the contract for the disposal of the dwelling house is made and the date of conveyance of the dwelling house.

Where an asset is disposed of under a contract, TCGA92/S28 fixes the date of disposal. Where, as is usually the case, a dwelling house is disposed of in an unconditional contract TCGA92/S28(1) provides that for Capital Gains Tax purposes the date of disposal is the date of the contract, see CG14250+. However the conveyance of the dwelling house will usually take place at a later date.

If some or all of the garden and grounds of the dwelling house are sold under a separate contract between these two dates then, providing the other tests of TCGA92/S222 are met, relief may be due. However if the contract for the disposal of the land is dated after the date of conveyance of the dwelling house, then relief will not be due.

For example, an individual owns a dwelling house which has been her only or main residence, together with garden and grounds of 0.5 hectares. In July 2009 she contracts to sell the house together with 0.1 hectare of land as a residence. The house and land are conveyed to the new owner in September 2009. In August 2009 she contracts to sell the remaining 0.4 hectares of land to a developer. If the other conditions for relief are fulfilled, relief will be available on the disposal of the 0.4 hectares of land.