Possible tax break for converted garages, outbuildings and extensions

Posted: 07/06/2012

Have you ever considered building an extension on your home but you were deterred by the idea of paying tax for it? Is your garage or outhouse a wasted space that could be converted into an extra living area but you felt bewildered by the regulatory obstacles and couldn’t afford the extra fees?

If you answered yes to the above, the latest news will be a welcome relief for you. Eric Pickles, the community’s secretary announced that he wants to remove tax for live in annexes and change the current regulations that make converting garages or out buildings unnecessarily difficult. He declared that it was unfair to charge homeowners double the amount of council tax because their annex is regarded as an additional dwelling.

This proposal has been made to try and battle the housing shortage as families could have extra living space, meaning relations could move into the converted building. The current law, which was passed in 1997 states that if the occupier of an annexe is aged 65 and over, is mentally impaired or permanently or substantially disabled, they are exempt from tax.

It is predicted that around 300,000 households could benefit from the proposed changes in England. Eric Pickles spoke to the Telegraph and said, ‘We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations. These reforms should also play a role in increasing the housing supply.’

The proposal is set to be part of the policy to increase accommodation supplies over the next two years with relaxation of taxes. However, if this was implemented, the local councils would loose out at a time when the town halls have to implement spending cuts.

The Labour party have criticized the Government’s proposal claiming they would build 25,000 new and affordable homes as well as making a temporary cut to the VAT. Hilary Benn spoke to the Telegraph and said, ‘This is a decidedly peculiar claim by Eric Pickles as occupied granny flats have been exempt from council tax since 1997.’ Mr Benn also stated that the Labour party’s plans would ‘get the economy moving again.’

What are your thoughts on the latest Government proposal to tackle the housing crisis? Would you be interested in taking advantage of the tax cuts and fewer regulations to convert your unused buildings or build an extension?

Amanda McGovern, Pali Ltd

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(1) Comments Government, housing, shortgage, tax

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