The road that I live in, over the last few years, people have been splitting up their land to build additional houses. This will normally mean they have been approached by a builder to sell part of their land to build these houses. The seller of the land would expect to be covered by the capital gains exemption for main residence relief, meaning they do not suffer capital gains tax.
THE TRAP – Exchange of contracts, for the sale of the land, must be done before the builders commence work. If the building work commences before the exchange of contracts, then the garden is no longer available for your own enjoyment and therefore you would not be entitled to the main residence relief. This would result in the sellers being required to file personal tax returns and capital gains tax may be payable.
