What are the tax implications, if any, of selling part of my garden?

I am currently discussing selling part of the garden of our only residential property and would like to know if tax is payable on the proceeds. The land would probably be sold to a builder for the construction of two semi-detached houses.

4 Replies to “What are the tax implications, if any, of selling part of my garden?”

  1. Selling off part of your property will have large implications on capital gains. Also if you have a mortgage they will be paid first. Because the land is part of the loan.
    If you have enough property to build 2 residential homes on it why not get a loan against the future rental of the 2 homes and keep them as part of an income property. Then live in one for 2 years sell it and take the money without paying any capital gains. Then do the same on the 2nd home and so on.

  2. If it is India you will have to pay Capital Gain Tax. If the property is purchased by you within a year you will have to pay income tax and if it is more than one year old, Capital Gain tax. You have mentioned that two houses are coming up in that area, if you are going to buy then you will be exempted from Capital Gain Tax. Better consult a tax Auditor. Capital Gain tax will be calculated based on indexed valuation. So you will have to contact Income Tax Office or a Tax Auditor to know the index rate.

  3. The capital gains tax exemption for principal private residence includes grounds not exceeding half a hectare (approximately 1 1/4 acres), or such larger area as is appropriate to the size and character of the house. If some of the land is sold, including for the purpose of building plots, the sale is covered by the exemption so long as the land was enjoyed as part of the garden and grounds, and is sold before the house is sold or at the same time the house is sold (but not after the house is sold).

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