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    • ftsos
    • By ftsos 20th Apr 17, 2:49 PM
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    ftsos
    Selling to Buy and the Amount of Tax if Any?
    • #1
    • 20th Apr 17, 2:49 PM
    Selling to Buy and the Amount of Tax if Any? 20th Apr 17 at 2:49 PM
    Hello Everyone,

    If I was to sell a house, that didn’t have a mortgage, and I want to use all of the money from the sale to buy the new home where we will live in the future. I will need a mortgage or raise funds for the difference. However, I need to know if I am going to be taxed on the sale?

    Right now the house I am looking to sell is not listed as my main residence, will that make a difference? Although I am selling it to buy a home which will be my main residence. Can anyone who knows about these things let me know if I will be taxed heavily?

    Thank you.
Page 1
    • pjcox2005
    • By pjcox2005 20th Apr 17, 2:53 PM
    • 474 Posts
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    pjcox2005
    • #2
    • 20th Apr 17, 2:53 PM
    • #2
    • 20th Apr 17, 2:53 PM
    Yes, if the home is not your main residence then principal private residence relief may not apply and any gain could be subject to capital gains tax. You'd need to look at the gain arising (basically proceeds from sale less original acquisition cost), how long the property has been owned, and if there are any exempt periods (e.g. was it ever your home you lived in)


    Where do you currently live at the moment, if it's in a second property you own then selling the other property to move into a new one, may mean that the additional stamp duty rules could apply. (Note you'll likely pay stamp duty on the purchase anyway, it's just the rate that applies may increase)
    • ftsos
    • By ftsos 20th Apr 17, 2:58 PM
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    ftsos
    • #3
    • 20th Apr 17, 2:58 PM
    • #3
    • 20th Apr 17, 2:58 PM
    So as an example if I bought it for £200K, and sold for £350K, that would mean a gain of £150K right, if so what would the tax amount be roughly? Because I would be looking to use all of it towards a home. Its only because there is a family dispute that I am selling. I suppose that makes no difference in terms of tax.

    Yes, if the home is not your main residence then principal private residence relief may not apply and any gain could be subject to capital gains tax. You'd need to look at the gain arising (basically proceeds from sale less original acquisition cost), how long the property has been owned, and if there are any exempt periods (e.g. was it ever your home you lived in)


    Where do you currently live at the moment, if it's in a second property you own then selling the other property to move into a new one, may mean that the additional stamp duty rules could apply. (Note you'll likely pay stamp duty on the purchase anyway, it's just the rate that applies may increase)
    Originally posted by pjcox2005
    • Pixie5740
    • By Pixie5740 20th Apr 17, 3:01 PM
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    Pixie5740
    • #4
    • 20th Apr 17, 3:01 PM
    • #4
    • 20th Apr 17, 3:01 PM
    Here is a link to the mechanism for the CGT calculation.

    http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6

    Your reason for selling the property has no bearing on the amount of CGT payable.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • pjcox2005
    • By pjcox2005 21st Apr 17, 8:28 AM
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    pjcox2005
    • #5
    • 21st Apr 17, 8:28 AM
    • #5
    • 21st Apr 17, 8:28 AM
    So as an example if I bought it for £200K, and sold for £350K, that would mean a gain of £150K right, if so what would the tax amount be roughly? Because I would be looking to use all of it towards a home. Its only because there is a family dispute that I am selling. I suppose that makes no difference in terms of tax.
    Originally posted by ftsos


    If you've not lived there for any period of time that you would be taxed on the full gain of £150k.


    Assuming no other capital gains in the period, you could use your capital gains exemption of £11,300 to reduce the gain. If you hold it jointly with a spouse then they to could also use any capital gains exemption not previously used.


    This would lower the gain to c.£140k or £130k depending on circumstances, which you would be taxed on at either 18% or 28% depending on your other income in the year including salary. Given the size of the gain the majority will be 28%.


    So very high level, a tax liability of c.£36k. This could be reduced further by costs of acquiring and disposing of the property, capital enhancements etc.
    • ftsos
    • By ftsos 21st Apr 17, 9:44 AM
    • 100 Posts
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    ftsos
    • #6
    • 21st Apr 17, 9:44 AM
    • #6
    • 21st Apr 17, 9:44 AM
    You are making my want to cry right now. The last time I lived there was 3 to 4 years ago. Would this have an effect, if so, what would I need to prove that I had lived there 3-4 years ago?
    • Slithery
    • By Slithery 21st Apr 17, 9:52 AM
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    Slithery
    • #7
    • 21st Apr 17, 9:52 AM
    • #7
    • 21st Apr 17, 9:52 AM
    How long ago did you purchase the property?

    As already stated above the calculation you need can be found here, plug in all your numbers and come back if you have any questions.
    • pjcox2005
    • By pjcox2005 21st Apr 17, 11:12 AM
    • 474 Posts
    • 522 Thanks
    pjcox2005
    • #8
    • 21st Apr 17, 11:12 AM
    • #8
    • 21st Apr 17, 11:12 AM
    You are making my want to cry right now. The last time I lived there was 3 to 4 years ago. Would this have an effect, if so, what would I need to prove that I had lived there 3-4 years ago?
    Originally posted by ftsos

    Yes, as mentioned periods where it was your main residence will alter the calculation and reduce the tax liability at stake.


    I'd suggest following the calculation that others have set out above, but you need to effectively consider the full ownership period.


    - When did you buy?
    - Periods where it has been your main residence
    - If it was main residence, then you may qualify for letting relief and further exempt periods.


    With out the history of the property, we can't give a more detailed calculation but it sounds like the gain will be reduced compared to the previous rough calculation.


    This HMRC link may also be helpful:


    https://www.gov.uk/tax-sell-home


    https://www.gov.uk/tax-sell-home/absence-from-home
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