We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
really worried about this...
dazzer21
Posts: 74 Forumite
I have posted something along the lines of this before, but things have moved on a little since, so I'm sorry if some of you have read this before but I urgently need some fresh opinion on this...
I moved house just about 2 years ago, and decided to keep the first house on to rent out. in that time, things haven't really worked out and I am now selling to cash in on its equity. Contracts have been signed and things should start happening soon. The potential tax implications are causing me sleepless nights so I'm hoping that there's some useful information out there...
I lived in house 1 for 9 years. Not used for business other than as a billing address as I'm a self employed graphic designer. Always worked out of clients' premises. I have been at house 2 for around 2 years.
My *understanding* with regards to Capital Gains Tax on house 1 is that, as it was my main home before I moved out and rented it (as opposed to buying house 2 to exclusively rent that out instead), it isn't subject to capital gains. I hope this rings true...
With regards to income tax, that has already been paid on the rental accrued on house 1 (although I point out that each month, once the mortgage, insurances and agency fees had been paid, the house actually made a £20 per month loss!).
However, my main worry is that income tax will ALSO be a liability on the sale of the house, eating into the profit! Obviously, were I just to have moved from house 1 into house 2 without getting involved in any sort of rental shenanigans, income tax would not be a factor in the sale price/profit. Is it any different bearing in mind that the house has been a source of income (or, rather, LOSS!)?
I hope it's good news...
Thanks in advance
I moved house just about 2 years ago, and decided to keep the first house on to rent out. in that time, things haven't really worked out and I am now selling to cash in on its equity. Contracts have been signed and things should start happening soon. The potential tax implications are causing me sleepless nights so I'm hoping that there's some useful information out there...
I lived in house 1 for 9 years. Not used for business other than as a billing address as I'm a self employed graphic designer. Always worked out of clients' premises. I have been at house 2 for around 2 years.
My *understanding* with regards to Capital Gains Tax on house 1 is that, as it was my main home before I moved out and rented it (as opposed to buying house 2 to exclusively rent that out instead), it isn't subject to capital gains. I hope this rings true...
With regards to income tax, that has already been paid on the rental accrued on house 1 (although I point out that each month, once the mortgage, insurances and agency fees had been paid, the house actually made a £20 per month loss!).
However, my main worry is that income tax will ALSO be a liability on the sale of the house, eating into the profit! Obviously, were I just to have moved from house 1 into house 2 without getting involved in any sort of rental shenanigans, income tax would not be a factor in the sale price/profit. Is it any different bearing in mind that the house has been a source of income (or, rather, LOSS!)?
I hope it's good news...
Thanks in advance
0
Comments
-
It is good news.
As the house was your main home it will be exempt from capital gains tax for the time it was your main residence and the last three years of ownership. So no CGT to pay.
Income tax would only relate to the rental income not the sale proceeds, so you don't need to worry that the sale would affect that in any way.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Silvercar
Many thanks for that. I'd been told that by one person before, but until now had no clarification. Thank you0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.4K Banking & Borrowing
- 254.4K Reduce Debt & Boost Income
- 455.4K Spending & Discounts
- 247.3K Work, Benefits & Business
- 604.1K Mortgages, Homes & Bills
- 178.4K Life & Family
- 261.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards