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Stamp duty and capital gains tax advice
zeedee1
Posts: 19 Forumite
Hello, I'm hoping for some advice as I am going round in circles on the gov.uk website.
We are hoping to move house. Our plan was always to keep our current house and let it out, and then buy a second property as our main home. When the stamp duty holiday was announced we thought, great we would only have to pay the extra 3% rather than the initial stamp duty amount, so quite a significant saving. However, we haven't found anywhere to buy, and it is now likely we will miss the stamp duty cut off and have to pay the extra amount. If we decide to, I understand we can sell our current house after our onward purchase and claim back the additional stamp duty within a certain timescale. However, if we do this, are we liable for capital gains tax on selling this house? How does this work?
We wouldn't tie the purchases together in a chain. It would be a case of buying our new house, paying the extra stamp duty, then possibly selling our current house and claiming this back. I'm just trying to work out if this is feasible or if there are extra costs/tax implications.
TIA
We are hoping to move house. Our plan was always to keep our current house and let it out, and then buy a second property as our main home. When the stamp duty holiday was announced we thought, great we would only have to pay the extra 3% rather than the initial stamp duty amount, so quite a significant saving. However, we haven't found anywhere to buy, and it is now likely we will miss the stamp duty cut off and have to pay the extra amount. If we decide to, I understand we can sell our current house after our onward purchase and claim back the additional stamp duty within a certain timescale. However, if we do this, are we liable for capital gains tax on selling this house? How does this work?
We wouldn't tie the purchases together in a chain. It would be a case of buying our new house, paying the extra stamp duty, then possibly selling our current house and claiming this back. I'm just trying to work out if this is feasible or if there are extra costs/tax implications.
TIA
0
Comments
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You own A now, and it's your home.
You buy B and it becomes your home. You pay +3%.
Within three years, you sell A, you can reclaim the +3%.
The next question, of course, is whether you really want to run a residential lettings business, how profitable it's actually going to be with a sizable mortgage (move to BTL, or can you get CTL?) on it, and whether that's the right property even if you do...1 -
Thank you and yes, we have experience of letting out properties so we are not worried about running that side of things, and it was always our plan with this house which is in a very desirable area for rentals. We have our finances already agreed with a BTL mortgage. Of course, as you've pointed out, we need to work out how profitable it will be, hence why I'm asking about capital gains tax, as this would need to be considered as part of our decision.AdrianC said:You own A now, and it's your home.
You buy B and it becomes your home. You pay +3%.
Within three years, you sell A, you can reclaim the +3%.
The next question, of course, is whether you really want to run a residential lettings business, how profitable it's actually going to be with a sizable mortgage (move to BTL, or can you get CTL?) on it, and whether that's the right property even if you do...0 -
Yes, CGT will payable on the gain in value since purchase, proportional for the period it wasn't your residence - just like any other rental property. And, of course, all the other taxes that apply.
There's currently a nine month allowance after you move out. It used to be 18 months, the relevant one is the one at the time you sell - it may be zero.
If you'll have owned it for ten years, and rented for two, then you'll be liable for CGT on 20% of the gain.2
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