Private residence relief: example: sale of dwelling house: land exceeds permitted area
This example illustrates the apportionments which are required when a dwelling house is sold with garden or grounds which exceed the permitted area, see CG64800+. In small and straightforward cases this approach may be simplified and examples of two simpler methods of apportionment are given at CG65117 and CG65118.
C owned a dwelling house, which has always been his only or main residence, together with 5 hectares of land which has always been the garden or grounds of that residence. The property cost £250,000 in May 2004 and he sold it for £500,000 in March 2014.
The First Tier Tribunal determined that the permitted area in March 2014 was two hectares. The Valuation Office Agency has agreed the following apportionments:-
|Dwelling house and permitted area||200,000||410,000|
The gain on the dwelling house and permitted area is wholly relieved so no computation is needed. The gain on the remaining land is computed as follows.