made redundant, selling home and moving into previous home - CGT?!

edited 30 November -1 at 1:00AM in Cutting Tax
2 replies 642 views
marjoriedoormarjoriedoor Forumite
10 Posts
edited 30 November -1 at 1:00AM in Cutting Tax
Hi

Please can someone advise me re potential CGT/ other tax issues - I've got myself into a bit of a mess financially since being made redundant last year.

I bought my home in 05/06 and continued with the purchase despite the fact that the sale of my previous home fell through. I kept the old house on and agreed a sale at the beginning of 2006, but before we exchanged contracts the credit crunch started to hit and the buyers pulled out (August time?). Since then, the property has either been empty or rented out (last 1-2 years) to help cover cost of the mortgage payments. Since being made redundant a year ago, I have failed to find work and have been claiming contributions based JSA. This ran out last month and I have had no income - the tenant I had in my old house moved out a few weeks ago, as I put the property on the market again in january 2010 (35k less than it 'sold' for 3-4 years ago) and despite loads of viewings noone is buying. As a last resort, I put my home on the market a few weeks ago - and have now accepted an offer on my home, which should provide me with 50k profit. My only real option is to move back into my old property, which will need several thousands spent on it, but has a much smaller mortgage. Do I have a tax liability re CGT at all? My plan is to stay put once I move, as the kids start secondary school next year and I do not intend to move home again until they have at least completed their education. Any monies left over from the sale of our home will go towards modernising the old house and day-to-day living costs to support us while I retrain (I have accepted a place on a PGCE course starting in 2011).

Any advice is much appreciated - thankyou.

Replies

  • I assume you did not elect to have the new house treated as your main residence for CGT purposes. If this is the case, CGT will be due on the difference between the purchase price and the selling price, ie £50k, but if the house is owned jointly (you mention 'we'), you each have an exemption of £10,100 this year to set against the gain and you also need to take the purchase and sale costs into account. It does not matter what you intend to do with the money, there is a gain if it is not your main residence.
    Ther will be potentially be a gain when you come to sell the original house, but this would be covered by the letting exemption (of up to £40k), I imagine.
  • CLAPTONCLAPTON Forumite
    41.9K Posts
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    you have two houses
    one the 'old' one
    and one the 'new' one

    you bought the new one in 05/06 and have lived there as your principal private residence
    your old one was either empty or let out during this time.


    you are now selling you new house; as it was your PPR you have no cgt to pay as PPRs are exempt.

    when you come to sell your old hopuse them they may be a small liability to cgt but it depends upon the rules at the time... if jointly owned and with the benefit of the letting relief it's unlikely to have any cgt
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