Capital Gains Tax on Sale

SWLondon86

Hi all,

Would appreciate your advice.

I am currently in the process of buying a flat and selling a house.

I have had an offer accepted on the flat, mortgage approved and legals are well under way.

The house however, is still on the market and will probably take a couple more months with the market as it is.

I am not technically in a chain as I can buy the flat without the funds from the house, so was hoping to complete on the flat as soon as possible and then sell the house.

I understand that I will probably have to pay the extra 3% stamp duty on the flat but that can claim this back if the house sale occurs within 12 months.

My question is, if I complete on the flat before the house if sold, will I be liable for capital gains tax on any profit I make on the sale of the house? As it could be considered my second property or not my main reaidence in the overlap period.

Any advice or thoughts would be appreciated!

I really don't want to lose the flat! But equally paying a huge tax bill doesn't appeal!

G_M

You have[STRIKE] 3 years[/STRIKE]18 months to sell the house (assuming it's currently your min residence), not 12 months so far as reclaiming the additional SDLT is concerned.

There will not be CGT to pay if it is, or was, your main residence.

SWLondon86

Thank you!

The whole process is very confusing and struggling to find anything online that relates to my situation!

00ec25

SWLondon86 wrote: »

The whole process is very confusing and struggling to find anything online that relates to my situation!

everyone is given an 18 month "grace" period in which to sell what was once their main home after they move out of it and still be exempt from CGT, it is called private residence relief

surprised you cannot find anything on your situation since it is one of the most basic ones possible:

https://www.gov.uk/tax-sell-property

https://www.gov.uk/tax-sell-home

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet

SWLondon86

Thank you for the links.

I had previously read these but didn't think they were very clear - pribably just my own misunderstanding!

I had a 'consent to lease' for a period when I wasn't living in the house but for the last 3 months the house is my only property and has been vacant.

So I guess I am going to be subject to some tax for the rental period but hopefully I won't be charged the full 28% on the gain.

kinger101

You've not provided any information on when your purchased the house, whether it was ever your main residence, when it was let, when it was vacant or when you intend to complete on the sale. Without these, it's impossible to say whether you will be liable for CGT.

I'd suggest re-reading the links that were provided, and then presenting the relevant information.

00ec25

SWLondon86 wrote: »

Thank you for the links.

I had previously read these but didn't think they were very clear - pribably just my own misunderstanding!

I had a 'consent to lease' for a period when I wasn't living in the house but for the last 3 months the house is my only property and has been vacant.

So I guess I am going to be subject to some tax for the rental period but hopefully I won't be charged the full 28% on the gain.

your status is not what you described in your opening post!!!!

on that basis you are liable for CGT but how much you actually have to pay is down to the details of the calculation and is the single most common situation going

read the links again, you claim PRR and letting relief
use the forum search function, examples have been given countless times

SWLondon86

Ok but when I had the 'consent to lease' it wasn't because I owned another property. I have only ever only owned the house.

I let it out and moved back in with my parents due to a relationship breakdown and travelling a lot because of work.

So I would have thought it would still only be considered my main residence.

Apologies if you thought I was trying to mislead in my original post.

G_M

SWLondon86 wrote: »

Ok but when I had the 'consent to lease' it wasn't because I owned another property. I have only ever only owned the house.

I let it out and moved back in with my parents due to a relationship breakdown and travelling a lot because of work.

So I would have thought it would still only be considered my main residence.

Apologies if you thought I was trying to mislead in my original post.

So far as CGT is concerned, the number of properties you own, and the reason for moving out are both irrelevant.

Was tthe property you main residence for the entire period of your ownership? No? Then CGT may be payable depending on the precise timescales etc.

GCT is payable on all 'Capital Gains' with the excepion of private residence relief - so what matters is whether it was a private residence throughout the period of gain.

Oh - and I was wrong above. you have 18 months to sell to reclain the additional SDLT, not 12 months as you said, or 3 years as I said!

p00hsticks

SWLondon86 wrote: »

Ok but when I had the 'consent to lease' it wasn't because I owned another property. I have only ever only owned the house.

I let it out and moved back in with my parents due to a relationship breakdown and travelling a lot because of work.

So I would have thought it would still only be considered my main residence.

For tax purposes, your main residence is usually where you are actually living.

The property can't be classed as your main residence for the period where you were letting it out and living elsewhere, even if it was the only property you owned.

00ec25

SWLondon86 wrote: »

Ok but when I had the 'consent to lease' it wasn't because I owned another property. I have only ever only owned the house.

I let it out and moved back in with my parents due to a relationship breakdown and travelling a lot because of work.

So I would have thought it would still only be considered my main residence.

Apologies if you thought I was trying to mislead in my original post.

main residence is a property where you live, it is not a property where your tenants live as their main residence. By definition if it was let then it was no longer your home, and to be a home you have to be occupying it, not merely owning it whilst someone else occupies it.