Overlapping new house purchase....

Ciprico

Could someone point me in the right direction for implications of buying a new house say 6 months before selling old house.

Not worried about utilities etc more so about sdlt on new home and cgt on old home.

Reason is new house needs work doing to it.... 

We accept the risk our sale may fall though in 6 months

Many thanks in advance... 

p00hsticks

As I understand it;

Assuming that 'old' house is currently your main residence, abd has been for the entire time you've owned it, and 'new' house will be once you've done the work on it, and that you're in England.

You'll have to pay the additional 3% SDLT on the purchase, but can claim it back when you sell the old house (providing it's within 3 years). 

They'll be no CGT to pay when you sell the old house, because it'll have been your main residence the entire time.

Technically the six months where the new property is not your main residence means that you'd need to do a CGT calculation if and when you later come to sell it - but if you intend living there for any length of time it's very unlikely under the current rules that it would result in any CGT being paid. 

Jeremy535897

p00hsticks said:

As I understand it;

Assuming that 'old' house is currently your main residence, abd has been for the entire time you've owned it, and 'new' house will be once you've done the work on it, and that you're in England.

You'll have to pay the additional 3% SDLT on the purchase, but can claim it back when you sell the old house (providing it's within 3 years). 

They'll be no CGT to pay when you sell the old house, because it'll have been your main residence the entire time.

Technically the six months where the new property is not your main residence means that you'd need to do a CGT calculation if and when you later come to sell it - but if you intend living there for any length of time it's very unlikely under the current rules that it would result in any CGT being paid. 

There is a special provision for these circumstances:

"Some periods when you were not using the house as your only or main residence will still qualify for relief. These should be treated as periods of actual occupation when you’re calculating the fraction of any gain that qualifies for relief.

If, for up to a period of 24 months you do not occupy your new home when you acquire it because you’re unable to sell your old home, or you need to carry out refurbishment redecoration or alterations, you can treat up to the first 24 months as if the house had been your only or main residence in that period. The same treatment applies when you buy land to build a house on.

Example 6

You bought a house in January 1998, but it needed major refurbishment and you could not move in until January 1999. If it was subsequently your only or main residence until you sold it in June 2021, you are entitled to full relief."

From https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2022

Ciprico

Many thanks for the clear explanations