Buying next house before selling current house

swr001

Hi all,

Hope someone can help clarify slightly. It looks like we are in a position where we can afford to buy our next house... however, the vendors of the house we have seen want to sell very quick. We can get a mortgage and suitable deposit to buy this 'new' house while still actually owning our current one to speed up the process. In principal we can afford both mortgages and to run both houses while out current house sells. I understand we will be liable for second house stamp duty (whopping amount more!) But this can be refunded if the current house is sold in 3 years, which we will do.
My main question is would we be liable for capital gains tax when we sell our current house (likely to sell for 15-18,000 more than we paid 4 years ago) I have seen somewhere that if our current house is sold within 18 months then it would be classed as a normal house sale/purchase and therefore no capital gains tax.
Also, is there anything else we should be considering if we go down this route?
Thanks in advance.
Sam

eddddy

Are you sure that your 'new' mortgage lender will allow this?

Lenders often make it a condition of giving you a new mortgage that you pay off your old one.

And unless you have specifically applied for a 'second home' mortgage - both mortgages probably say the property must be used as your main residence (and you can't really have 2 main residences).

buggy_boy

You could find it more difficult as although you may qualify for the new mortgage alone, if you have already a mortgage this will need to be taken into account for the affordability, along with all the bills that go along with owning two properties.

Check with the mortgage supplier, I think some only allow one residential mortgage... Make sure all your ducks are in a line.

swr001

Thanks both, when discussing with the bank and a separate mortgage broker I made it very clear that we would be buying this 'new' house before selling our current one. Which does give us a lower amount we can borrow compared to of we had already sold this so they do seem to be taking that into account...
Our current mortgage is quite small and monthly repayments are low and we are also nearing the end of the term so the buyout would be minimal.
Thanks again.

00ec25

higher rate SDLT = correct
SDLT refund if sold within timelimit = correct
CGT 18 months "grace" period in which to sell old main home whilst owning new home = correct

anyway, even if you take longer than 18 mths to sell, you'd still get your CGT allowance against any liability so that would "buy"a bit longer

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

spendinglikemad

we did it and it allowed us to move quickly, worth doing if its a house you really want

SLM