Selling my 2nd home

PierremontQuaker03

Hi, thanks for looking. I have just moved into my new house and I still own my previous home but am renting it out.  I am looking at all options, am I correct in saying that if I sell my previous home within a year I do not have to pay capital gains tax, I think I heard it somewhere?  I know me and my wife will have a capital gains tax relief of around 12,300 each, but we will maker much more than 25k profit as we have owned the house since the 1990s.
Any advice would be much appreciated. Thank you.

[Deleted User]

Sounds like one of those pub rumours!

If you sell it today, having rented it out for a year, all but 3 months out of the total months of ownership would be exempt e.g. bought in April 1996 -297/300 of the gain is exempt. You also have 12300 exemption each - I think that you will be fine!

PierremontQuaker03

[Deleted User] said:

Sounds like one of those pub rumours!

If you sell it today all but 3 months out of the total months of ownership would be exempt e.g. bought in April 1996 -297/300 of the gain is exempt. You also have 12300 exemption each - I think that you will be fine!

thank you, thought it was too good to be true

[Deleted User]

PierremontQuaker03 said:

[Deleted User] said:

Sounds like one of those pub rumours!

If you sell it today all but 3 months out of the total months of ownership would be exempt e.g. bought in April 1996 -297/300 of the gain is exempt. You also have 12300 exemption each - I think that you will be fine!

thank you, thought it was too good to be true

Have you misread my post - it is extremely unlikely that you will pay any CGT!!

thor

purdyoaten2 said:

Sounds like one of those pub rumours!

If you sell it today all but 3 months out of the total months of ownership would be exempt e.g. bought in April 1996 -297/300 of the gain is exempt. You also have 12300 exemption each - I think that you will be fine!

Why is this?

Jeremy535897

The assumption made is that OP sells the house at the end of their  "within one year" period, which is 12 months after they stopped using it as a main residence. On the assumption the house was bought in April 1996 and sold in April 2021, after 15 years or 300 months of ownership, the first 14 years are exempt as the property was occupied as their main residence, and 9 out of the last 12 months is also exempt by law. That means 297/300 of the gain, on these assumptions, is exempt. If 3/300 of the gain exceeded £24,600, and assuming a cost of £200,000, the house would have to sell for about £2.5 million before any tax was payable.

[Deleted User]

thor said:

purdyoaten2 said:

Sounds like one of those pub rumours!

If you sell it today all but 3 months out of the total months of ownership would be exempt e.g. bought in April 1996 -297/300 of the gain is exempt. You also have 12300 exemption each - I think that you will be fine!

Why is this?

Explain what you mean?

[Deleted User]

Jeremy535897 said:

The assumption made is that OP sells the house at the end of their  "within one year" period, which is 12 months after they stopped using it as a main residence. On the assumption the house was bought in April 1996 and sold in April 2021, after 15 years or 300 months of ownership, the first 14 years are exempt as the property was occupied as their main residence, and 9 out of the last 12 months is also exempt by law. That means 297/300 of the gain, on these assumptions, is exempt. If 3/300 of the gain exceeded £24,600, and assuming a cost of £200,000, the house would have to sell for about £2.5 million before any tax was payable.

That indeed was my assumption- as the op mentioned having to wait for a year.

thor

[Deleted User] said:

thor said:

purdyoaten2 said:

Sounds like one of those pub rumours!

If you sell it today all but 3 months out of the total months of ownership would be exempt e.g. bought in April 1996 -297/300 of the gain is exempt. You also have 12300 exemption each - I think that you will be fine!

Why is this?

Explain what you mean?

I was just wondering about the reason why cgt was exempt for the ratio of 297/300. I missed the bit where the op had said it was their previous live in property and Jeremy has very clearly explained it.