Capital gains tax on property

digger123


Joined: 07/04/2009
Posts: 10

Message Posted:
13/04/2009 10:58

If you have two homes in the UK,sell the one you live in,move in to the second home,would you then have to pay tax on this property if you sold up

No1Doyen


Joined: 04/07/2008
Posts: 16617

Message Posted:
13/04/2009 11:05

There is no Capital Gains Tax payable on a property that is your main residence. You can only have one property as your 'main' residence.

digger123


Joined: 07/04/2009
Posts: 10

Message Posted:
13/04/2009 11:39

Hello Doyen,thats what i am trying to find out,so i sell the home we live in (main residence ) so are you saying that we could then move into the second home and make that our main residence and then move on again avoiding tax

digger123


Joined: 07/04/2009
Posts: 10

Message Posted:
13/04/2009 11:41

Did also mean to say,do the selling in the space of a few months

No1Doyen


Joined: 04/07/2008
Posts: 16617

Message Posted:
13/04/2009 12:41

Digger123. It depends on what you have been doing with the second property, for example has it been let out?

trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
13/04/2009 13:03

This is not a black and white situation. The sale of the 1st house, if it has been your private residence throughout, will be exempt for capital gains tax. The second house will qualify from the date you move in so that the gain on sale will be apportioned according to the number of years used as second home and main residence. If the house has been let out there is a letting exemption. You are also entitled to an annual exemption for capital gains tax of £9800 (currently) and this would be each if there are 2 owners.

If you need any more info please contact me off board. I am a tax adviser if you need more detailed advice.

cooper


Joined: 23/10/2007
Posts: 3386

Message Posted:
13/04/2009 13:13

You may find this link helpful - http://www.fairinvestment.co.uk/uk_capital_gains_tax_rules.aspx





Cooper

trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
13/04/2009 13:23

Cooper - Sorry but some of the information on that site is out of date!

cooper


Joined: 23/10/2007
Posts: 3386

Message Posted:
13/04/2009 13:54

Thanks for pointing that out trishyi, who said tax doesn't have to be taxing !

trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
13/04/2009 14:00

The problem is they keep changing everything sometimes with very little or no announcement and not everyone wants to check the HM Revenue & Customs website everyday!

fire starter


Joined: 19/06/2008
Posts: 3401

Message Posted:
13/04/2009 16:42

you have to live in it three years and pay the council tax then i think you can sell without a problem.

trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
13/04/2009 17:40

That is not strictly true and this can be a complicated area of tax so it is always a good idea to get specific advice. The capital gain relating to the last 3 years of ownership will qualify for the main residence exemption provided the property has been a main residence for part of the period of ownership, If the house/flat has been owned for 10 years and only lived in for the last 12 months of ownership 3/10ths of the capital gain will be exempt but the other 7/10ths will not be exempt unless covered by the annual exemption.

fire starter


Joined: 19/06/2008
Posts: 3401

Message Posted:
13/04/2009 17:44

trishi, have friends who have recently done it, (last year)sold house one moved into house two, three years later sold it. no problems.

trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
13/04/2009 18:25

Hi firestarter, it all depends on so many different scenarios and as in the UK tax system it is self assessment and sometimes it is some time after when the Inland Revenue catch up with you. I have recently dealt with an investigation into a client's tax affairs where they sold a 2nd property where not all the gain was exempt and the client ended up with a £12K tax bill. It might be ok for digger 123 but it is by no means certain until the calculations are made.

trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
13/04/2009 18:34

Forgot to say the client had thought it was ok too until the taxman investigated into the sale!