CGT Tax / Outhouse and Business

MrHappyChap

If I have a stone outhouse (on the land of primary residence) and convert it to use exclusively for use as an office and business storehouse, and sometimes customers might be there, then upon sale of primary residence (including outhouse) then CGT tax would probably be owed on the outhouse.

If the business is really a small part-time business with not a lot of profit being made, is it possible that the CGT tax eventually owed on the stone-barn could actually be greater than the profits made from the business, and therefore making the whole idea of having the business rather pointless?

Victor

I suspect if the commercial uses is purely ancillary to the main use as a residence, you won't be charged CGT. However, if say a doctor was running a surgery from 2 downstairs rooms in a house and living upstairs, then the CGT would be pro-rata the areas and years involved.

MrHappyChap

I wasn't aware of that; of course I'd have to check everything out officially if I went ahead with anything.

But I've sometimes seen people in the country and they might have an outbuilding (in the garden of their house) and conducting some sort of business from it such as repairing lawnmowers or making picture frames, or selling old furniture/antiques from the outbuilding.

So do you not think these people would have to pay CGT tax (on the outbuilding) when they eventually sell their house?

spongebob

doesn't sound right unless you let it to yourself on the books.

its still one property and still your primary residence so no CGT...unless...Is there a cap on the value of a primary residence tax relief at 100% ISTR that it was IR500k once and that you would pay CGT on the balance.

MrHappyChap

The reason I thought there might be a CGT liability in such a scenario was because even if an outbuilding is on the land of a primary residence, the actual outbuilding itself is not itself the primary residence.

In the same way if someone has a primary residence with 5 acres of land attached, there is a CGT liability on the land over a certain amount.

Big al

You would only pay CGT on disposal of the outhouse alone. if its sold with you house its not really an issue. its the same as having a house with 10 acres, if you sell it all its a farm if you sell to 10 acres for development its CGTable

MrHappyChap

So, if the outbuilding is sold with the house, maybe there might be no CGT tax owed at all?

I thought if a house with 10 acres was sold as one lot (as a farm) then CGT tax would be due on the 9 acres. afaik, a principal residence can consist of one house and land up to 1 acre. Land above this area (afaik) is considered a land investment and CGT is due upon sale; even if it's attached to the principal residence.

Victor

Originally posted by MrHappyChap
afaik, a principal residence can consist of one house and land up to 1 acre. Land above this area (afaik) is considered a land investment and CGT is due upon sale; even if it's attached to the principal residence.

I think it is actually two acres.

Big al

i'm not a farmer so i might be wrong on the acre's bit but the outhouse is like a shed.