Selling a property when owning 2nd home

morten44

Hi
I own a house and are thinking about moving.
Idealy i would like to buy another house first, move my stuff over and put my 1st house on sale.

Question: Will this cause problems like having to pay capital gain tax on my house just because I have 2 properties?

Just seem more logical if possible to do it this way as it makes the whole moving less stressfull

Thanks

Halle71

I've been doing a bit of research on CGT recently and believe that you've lived in a house as your main residence and then move out, the next three years are exempt from capital gains tax if you sell. So you should be fine.

morten44

Hi T
Thanks for reply
So if i buy a 2nd home in January, then I managed to sell my primary residence in March.
Despite owning 2 houses as long as I keep my primary address at my main residence, i should be fine?

When you buy and sell a property, are the tax offices notified automatically or is it the sellers responsibility to notify about capital gain tax on a sale?
This question is more just for me to understand the process of selling and where the information of the sale goes.

Thanks again

Yorkie1

Your main residence would automatically move for tax purposes as soon as you move.

But if you move out of House 1 to House 2 in January 14, you have until January 17 before any subsequent rise in value counts for CGT purposes. You'd have absolutely no liability for CGT if you sold House 1 in March 2014.

morten44

So just to make sure I understand
Its not a problem to own 2 properties at the same time.
When I sell my "main residence" and move into my 2nd property, I do not pay CGT

The info of the sales goes automatically to the tax office but they will automatically grant me "Private Residence Relief" as they know this has been my primary residence for the last several years.

I should continue to keep my primary address at my first house and first move my address to the new house when the 1st one has been sold.

Regarding my 2nd house, i guess i can still open and pay the utilties like water, electricity and conuncil tax in my name despite not beeing my primary residence. This will not create any problems for me by the tax man.

Have I understood all this correct?

Thanks again for your answers so far

Kynthia

When you have two properties that aren't let out, you should declare which one is your main residence to the HMRC. If you don't it will be based on evidence of which one you lived in, had your post come to, kept your valuables, etc. However I think you are focussing on this issue when it makes no difference to you. Move out of property 1 into property 2. Sell property 1 within 3 years of moving out. Pay no CGT. That's it.

There's no advantage that I can see to keeping property 1 as your main residence after you move out, as the fact that it was once your main residence means it's CGT exempt for the last 3 years of ownership. Lots of people own two homes, think of those with a crash pad in the city while living in the main home further out. Google 2nd homes for more info if your worried. Just make sure you pay the correct council for property 1 once you move out as it might differ when it becomes your empty 2nd home. Also your buildings insurance may need informing that the property is empty.

morten44

Hi
Thanks alot for your answer.
That was very clear

Kynthia

morten44 wrote: »

Hi
Thanks alot for your answer.
That was very clear

Thank you. Im fairly sure of my facts but as I'm no expert and advice on internet should always be double checked so take a look on the link below. It covers both the issues of not selling your home straight away and owning two homes.
http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm