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Garden Investments

Garden InvestmentIf you are looking for a way of making money, then you might consider creating a large garden. In fact, you can make tremendous money buy purchasing a house with a huge garden and then building more houses. With this, you can take advantage of the tax breaks as a householder, similar to the same tax breaks enjoyed by professional developers.

Selling just a portion or the entire primary house means capital gains tax is exempt. Therefore, we have seen an increase in property for this very reason. In other words, if you were to build a house in the back garden, but sell the current home while moving into a new home, the new home would now become the primary residence without you having to pay any tax.

Let us say you had a single original property worth 300,000. If you were to divide this, making it two separate properties now worth 240,000, no stamp duty would have to be paid. Now, if you were to obtain planning permission and you were to get rid of the garden along with the development value, no taxes would apply since this is your primary residence. However, anti-avoidance provisions would apply. Therefore, you purchased land with the intention of developing, it could be seen differently, more as a trading transaction, which means capital gains tax would likely apply.

You need to remember that the Revenue and Customs would probably not be able to determine your intentions when buying a house with a huge garden. The only way they would know what you were up to is if they read minds, which we know they cannot do. On the other hand, if you were a professional builder and you had been buying and reselling for years, then suspicions would arise. The disturbing aspect is the deception to the Revenue and Customs could mean time in prison.

You also want to remember that up to half a hectare being used for a garden with a house is acceptable. However, the larger the house the more attention it might get from officials. For instance, if you were to sell just a small corner of the grounds to use for development, the capital gains tax might be attracted. Homebuilders will use another option to maximise profits by selling the old house on the property, moving into the new one but then selling it immediately.

You need to keep in mind that if you were to move into a home that has a huge garden, and then you build another house quickly only to sell it within weeks, your actions would be looked at very, carefully. If you have no obvious income then the officials may determine you to be a professional developer, which means you would be taxed. In fact, the Revenue may eliminate any capital gains tax exemptions, which would include an annual 8,500 allowance.

Something else you want to think about is that some people are anticipating a cash-in on the garden. In this case, planning gain, which is an amenity benefiting a developer would need to ensure the entire community does not pay or suffer. For instance, a builder of a big scheme, which is when investors put in to buy, may need to provide a health centre or school to accommodate any of the new residents.

A standard planning gain supplement is expected by the government, which would help pay for these types of amenities. However, the concern people have is that private residences could somehow become caught in the middle of this new tax. Even so, this supplement is intended to provide additional funding for local amenities. From the latest news, it is expected this supplement will be introduced sometime in 2008 but in the meantime, people owning houses with huge gardens are encouraged to obtain planning permission now.

By obtaining planning permission, you need to expect some challenges. The good news is that gardens such as this are regarded as Brownfield sites that the council can use to make Brownfield development statistics appear better than they are. Regardless, the most important aspect is access in and out from the road. For this reason, corner plots are the most sought after. However, if existing access is already in place, just make sure it complies with the local development plan.

Next, you would need to make sure the new plot is large enough to accommodate a house. For this, you can look at the council's policy on plot sizes to see how much distance is needed between houses. Just remember that these numbers will vary from one area to another area. In fact, some will only specify a minimum size. Let us say the minimum was two hectares but you only had 1.5 hectares - your land would not work. If your land is too small, you could be targeted for capital gains tax.

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