What is our capital gains tax liability if we convert our house into 4 flats for sale?
This is going to be complicated but you will definitely find yourself paying capital gains tax. If you are not careful, you might find yourself with a CGT liability on the flat your builder gets as well as all the others as he will be deemed to have bought it in exchange for his services. I recommend you unbundle this. It is way too complex. It will spiral out of control very fast as the builder will have a vested interest in doing this as cheaply as possible. First get outline planning permission. Then get the house valued with the planning permission, do the detailed design and get a price from three reputable builders for the work. Now that you have real numbers, get an accountant to tell you how to do this to minimise your tax liability. Do not forget the cost of creating the leaseholds and the freehold management company. At that point it will be easy enough to decide whether to do the work/pay tax or just sell it with the planning permission/pay no tax.
