CGT on newbuild

clock24

My wife and me are building a new house, and if we decide to sell will make a capital gain.

The present personal 'allowance' of about £10k could be set against this, but could we set both our allowances against the gain - ie get £20k of gain discounted?

00ec25

as long as it is jointly owned then yes

clock24

Thanks, I did think that was the case, but always like some confirmation.

plane_boy2000

Why are you building it? If its your primary residence then its not subject to capital gains anyway

clock24

Our intention is to live in it, but, as I asked, IF we decided we were not happy with it and wanted to stay where we were (or, to complicate matters even more) - sell both the houses and buy a completely different home, what are the CGT implications then for the newbuild?
Life seems full of complications!!

Jonbvn

clock24 wrote: »

Our intention is to live in it, but, as I asked, IF we decided we were not happy with it and wanted to stay where we were (or, to complicate matters even more) - sell both the houses and buy a completely different home, what are the CGT implications then for the newbuild?
Life seems full of complications!!

One of your two houses has to be designated as your primary residence (to HMRC). It is best to designate the most expensive house as your primary residence - unless of course you a swamp dwelling scum sucking MP;)

00ec25

oops I should have asked that to start with!

once you own 2 properties you then have 2 years in which to inform HMRC which of the 2 properties is your main or principal private residence (PPR) . This is called the voluntary election. (I do not know when the clock starts ticking for a new build, ie completion date, work commencement date etc)

For CGT purposes the elected property does not have to be the one you physically spend most of your time in, provided you make the election within 2 years of becoming the owner of the second house. After 2 years the PPR status judgement becomes a matter of reality and will (over simplifying it) be judged on where you spend most of your time.
It is therefore very worth while making the voluntary election in time to get maximim CGT efficiency.
Once you have made an election you cannot change it unless you buy another property (either a 3rd one or you sell one and buy a replacement), in which case the 2 years starts again.

Trollfever

P.S.

Different rules apply if you are a Member of Parliament.


.

clock24

This is interesting.

So, if I designate my new-build house as my PPR and sell it, I would now have just one house. This must now be my PPR again (as it's the only house I have). Can that then be sold as PPR, so avoiding CGT again?

In effect both houses have been sold free of CGT! Cannot be correct as this would be an 'open door' for regular small builders.

(Personally I have neither the means, nor the will, to do another new-build but find the tax implications interesting).

muskoka

Theres a lot of valuable information on CGT on the this is money forums. I had similar issues and got a lot of info from them

getmore4less

Jonbvn wrote: »

One of your two houses has to be designated as your primary residence (to HMRC). It is best to designate the most expensive house as your primary residence - unless of course you a swamp dwelling scum sucking MP;)

How will that mitigate any CGT?

OP
You can arrange for both CGT allowances to apply.

I would check the situation if you move in and change your mind and move back into the old house, that will have the 3 years extra as well to give you time to decide.

If selling up both then an extra move may be worth it.

Also weigh up the new build sell as a brand new placew or one that has been lives in that may change the numbers to just take the CGT hit.

You could also look at having a house each.

If you never move in I guess it could be considered a property development so could come under different rules and possibly income tax.