CG65113 - 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 2011 and he sold it for £500,000 in March 2021.
The First-tier Tribunal determined that the permitted area in March 2021 was two hectares. The Valuation Office Agency has agreed the following apportionments:-
| Description | 2011 (£) | 2021 (£) |
|---|---|---|
| Dwelling house and permitted area | 200,00 | 410,000 |
| Remainder | 50,000 | 90,000 |
| - | 250,000 | 500,000 |
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.
| Minus | Description | Amount (£) |
|---|---|---|
| - | Disposal proceeds | 90,000 |
| less | cost | 50,000 |
| - | GAIN | 40,000 |