Sale of house/ downside = profit - liable for tax?

BertTheRaccoon

My in-laws have their house on the market and are ultimately looking to downsize.

They will be left with a cash surplus from the sale of their house and the purchase price of what they buy next.

I would estimate the figure will be in the £40k region.

If they just bank the surplus, are they liable to any capital gains tax or other nasties?

Both work, mother in-law only 16 hours a week and father in-law full time but no grand salary (circa £20K)

Any help appreciated (from those who actually know what they are on about) not housewife bloggers.

Thanks
Lee

gkerr4

no - not if it was their actual family home - i.e. they lived in it as their home.

CGT only applies to investments - houses bought to rent etc.

no worries on this front.

BertTheRaccoon

Many thanks for the reply, appreciated

badger09

BertTheRaccoon wrote: »

My in-laws have their house on the market and are ultimately looking to downsize.

They will be left with a cash surplus from the sale of their house and the purchase price of what they buy next.

I would estimate the figure will be in the £40k region.

If they just bank the surplus, are they liable to any capital gains tax or other nasties?

Both work, mother in-law only 16 hours a week and father in-law full time but no grand salary (circa £20K)

Any help appreciated (from those who actually know what they are on about) not housewife bloggers.

Thanks
Lee

As gkerr4 says, no CGT if it was their home.

BUT, unless their income is below their personal tax allowance (£8105 each this year if under 65) then they will be liable to pay tax on the interest generated by the £40k.

If they are liable to tax, it will be deducted by the bank/building society. Ideally, each should first maximise their cash ISA allowance £5640 this year.