Homebuilders may be entitled to claim capital gains refunds

Homebuilders may be entitled to claim capital gains refunds

Thousands of taxpayers who built their own homes may be able to claim significant refunds after a landmark ruling found that HMRC had wrongly charged capital gains.

In this particular case, a couple who purchased land 13 years ago with the intention of building a new home and selling it, successfully challenged a capital gains tax bill of £150,000.

The ruling by the upper tribunal clarified that private residence relief can only be claimed from the point when the home is built, rather than when the land is initially purchased.

This means that individuals who have built their own homes and incurred capital gains tax during the period when they owned the land may be entitled to refunds or reductions in their tax liability.

The implications of this ruling could affect a significant number of self-build homeowners, particularly those who have made substantial gains, especially during times of high inflation. The amount of tax at stake can be substantial for such individuals.

Affected taxpayers should consult with their tax advisors to understand how this ruling might impact their specific situations and whether they are eligible for refunds or reductions in their capital gains tax liabilities.
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Rouse Partners

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This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

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