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Selling the main residence later: tax implications?
6am
Posts: 194 Forumite
We are trying to sell our house and buy a new one. It is possible that our sale may fall through. We decided that we will proceed with buying anyway because we can finance the purchase from mortgage and savings. What financial implications will we have with such arrangements. I understand that we will need to pay increased amount of stamp duty which we will get back if we sell our first house in 18 months. What about capital gains tax? How much will we need to pay CGT?
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Comments
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3% SDLT Surcharge, refundable on sale within 3 years.
At least 18 Months free from CGT.0 -
What if I decide not to sell the first house straightaway but let it out? I will lose 3% SDLT Surcharge.
Say for illustration purpose
- I bough the house for 150K ten years ago
- Now its value is 250K, and we buy a new main residence
- We let out our previous main residence and sell it in 5 years time for 280K
I am happy to pay CGT on 280 - 250 = 30K, I am not happy to pay it on 280-150 = 130K
Is anything I can do now to protect myself from unreasonable tax demands in future? I probably want some kind of recognised valuation that at the time I bought my new main residence that the value of my previous main residence was 250K. Does it make sence?0 -
You will have Private Residence Relief for the time it was your residence plus 18 months.
You will have Letting Relief for the time let.
If you have lived there for 10 years it will be a very long time before CGT becomes due, though obviously it will depend on the exact numbers and indeed the CGT rules at the time of sale.0 -
none whatsoeverDoes it make sence?
but then again you have no idea how CGT works so hardly surprising you have it wrong
your gross gain would be 130k, from which you deduct Private residence relief and letting relief and personal allowance
high probably that there will be no tax to pay at all
read this:
http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6
you would however be unable to reclaim SDLT as the refund period is 3 years (not 18 months)0 -
Thank you. I put figures into a spreadsheet and it seems that CGT is not something I should worry about.0
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