Buying a property off-plan — before it is built — and then selling it creates some unusual CGT questions. The disposal date, the base cost, and whether the 60-day return applies all depend on exactly what you sold: the completed property, or your right to buy it (the contract).
Two different types of disposal
When you buy off-plan, you exchange contracts with the developer. At exchange, you acquire a contractual right to purchase the property on completion. You have not yet acquired the property itself.
If you sell before the developer completes the property, you are assigning your contractual right, not selling the property. This is treated differently from a completed property sale.
If you hold on until the developer completes, take legal title, and then sell the completed property, that is a straightforward property disposal.
Selling the contract (assignment)
Assigning an off-plan contract means selling your right to buy, not the property. The buyer steps into your shoes and will take ownership on completion.
For CGT purposes, the disposal is of a contractual right. The gain is the difference between what you paid for the right (your deposit and any other consideration paid to the developer) and the amount you received from the buyer.
Importantly, this is not a disposal of UK residential property. Assignment of an off-plan contract is a disposal of a contractual right, which is a different asset. This means:
- The 60-day return for CGT on UK property does not apply
- The gain is reported on your annual Self-Assessment return in the normal way
- CGT rates depend on your income (the 18%/24% residential rates do not automatically apply — rates depend on the nature of the asset)
HMRC may treat the gain as income in some circumstances, particularly where there is a pattern of buying and selling off-plan contracts as a trade.
Selling after completion
If you complete (take legal title) and then sell the completed property, you own UK residential property and the standard rules apply:
- The 60-day return is required if you have a chargeable gain
- The disposal date is the date of exchange on your onward sale
- Your base cost is what you paid for the property on completion (purchase price plus costs)
- Private Residence Relief may be available if you lived there
The period from exchange of the original off-plan contract to completion by the developer is not included in your ownership period for PRR purposes unless you actually occupied the property. Ownership for CGT begins when you acquire the legal interest, which is completion.
Very short holding periods after completion
If you sell shortly after completing on an off-plan purchase — within weeks or months — HMRC may examine whether the transaction has a trading character. If HMRC concludes you were trading in property rather than investing, the profit is income, not a capital gain, and different rules and rates apply.
This is more likely to arise if you are selling multiple new-build properties in quick succession or if there is no evidence of any intention to hold or let the property.
The base cost on completion
When you complete on an off-plan purchase, your base cost includes:
- The purchase price paid to the developer
- Any deposit paid at exchange
- Solicitor's fees on the purchase
- SDLT paid on completion
Deposits paid at exchange are part of the total purchase price and are included in the base cost when the full purchase price is paid on completion. You do not add them separately.
Documentation
Off-plan purchases can involve complex conveyancing with stage payments, deposits held in escrow, and varied completion dates. Assembling the full chain of payments for the CGT computation requires the original exchange documentation and the completion accounts. Keep all correspondence with the developer and your solicitor.
If you have completed on an off-plan property and are now selling it, the 60-day CGT return obligation may apply. Start your return at LetsFile — a Chartered Accountant/Chartered Tax Advisor reviews the full ownership history and applies all available reliefs before filing via HMRC's official API.