Want to sell family home and move into my other home

harvey1964

I own 3 properties - two that I rent out and my main family home - the one we all live in. We are thinking of downsizing as the children have now left home. Can we sell our main family home ( thus avoiding capital gains tax ) and move into one of the other properties ? Will this then become our "family home " . Will we then have to pay CGT on this 2nd home if we move again ? Can anyone advise us or do we need financial advise ?

CLAPTON

you can sell the home you have always lived in (i.e. has always been your principal private residence PPR) without paying cgt.



if you then move into second property that you have previously rented which then becomes your (new) PPR you will have acgt liabilty but is will be less than otherwise and may be zero depending upon the details

John_Pierpoint

The let investment house will become your PPR.
If you were to sell that in the future, the capital gain would be spread pro rata over the years of letting and the years of PPR (in broad terms). The latter PPR occupation would be tax free.
Presumably the house is owned as joint tenants or tenants in common?
Thus there would be two annual nil rate bands to be set against the potential CGT.

Death cancels any CGT, & and replaces it with IHT on the total net value of the estate, the latter tax comes with its own nil rate band, currently £325k per person.

harvey1964

The other 2 properties are in my other half's name only . As she works part time but I work full time. Should I put them in both our names ? I was thinking the added rent may take me into the higher tax band ? So I can sell my main family home and move into one of the other properties. One I have owned for 30 years ( before I married ) the other one I have owned for 16 years but only started renting it in 2006. I declare both properties and do self assessment . Would we be better moving into the one We have owned since 1997 ? Is there a time limit we must live in it to declare it as our "family home" ?

CLAPTON

tax is about detail

in this context the word 'I' means you and not your wife

can you clarify the legal ownership of each property and when each was let out or lived in and who declares rent to HMRC

harvey1964

When I say "I" I mean "she" . She bought one before we married and then she bought one 16 years ago. These 2 are both in her name only, and paid for from her bank account ( also the same account where the incoming rent was paid into ) ! Our main family home is in both our names. Although it seems like we have separate bank accounts - we really don't ! We have a main joint account and my pay covers most things. It would be nice to be able to sell our family home and have a bit of money to ourselves , go on a few good holidays etc before we get old and decrepit !!!! Lol lolShe declares both of the rental properties to hmrc.- self assessment !
I can't remember the dates etc off hand of properties that were let out.

getmore4less

why not as an exercise work out your cuurent CGT liabilities.

if you google HMRC CGT you will get most of the relevent pages on HMRC and this will give the way to calculate the CGT due and any allowances.

Once you understand the basics you can then work out what future libilities might be for various options of ocupation and sale.

CLAPTON

ok

did she ever live in the two properties she owns?


mine you, I am struggling with the concept that a couple, one a higher rate taxpayer and the other who owns two rental properties can't afford a nice holiday.

harvey1964

Yes- she lived in one from 1982 when she bought it, to 1992 - when we both moved in together ( our main home we have now ) and married. The other one she bought in 1999 and her sister lived there ( she left her husband and had no where to go) it also needed done up so we didn't mind ! We didn't rent this property until 2005. It's still being rented.

CLAPTON

well just to summarise

1. don't let the tax tail wag the dog

2. if you sell your PPR (main residence you have always lived in ) then no cgt


3. if she sells a property that she has lived in for some time then she is liable to cgt but has several exemption


the tax is on the gain i.e. selling price less buying price less buy/sell expenses less improvements (not maintenance)

the gain is evenly spread over the total period of ownership ; so one assumes equal gain per month of ownership

she is exempt for the period she lived there plus the last 3 years
she has letting relief for the period of letting (max of 40k)
she has a cgt allowance of 10,600


often this means no tax to pay but it all depends upon the details.

if you wish to provide them then we could work out an example for you.

harvey1964

Many thanks for all these replies. We will have to think about this. I never thought this would be possible. We live in a large detached property- so whether we could get used to living in a much smaller property in a less desirable area without a garden will need some serious thought ! Such well informed people on here . Thanks again