Capital gains on 2nd property that becomes 1st property

iane15

I have two properties, one is our main residence and the other a small buy to let. We are selling our current home and moving into our rented property until such time as we are able to find a new main home. Will we be liable for capital gains tax when we eventually sell what is now a second home after having used it for six months to a year as our main home after selling the original main home?

jonnydeppiwish!

Yes you will - there is a calculation you can use and I suspect someone better informed will be along.
it’s does, of course, depend on how long you rented it out for and whether you lived in it before 

user1977

Yes, of course, otherwise that would be the sort of dodge everybody would try when selling a "second" home. It would change the calculation a bit (depending on timescales) but it isn't going to eliminate the taxable gain.

silvercar

Good move as it reduces the liability. Basically calculated in proportion to the time it was your home plus the last 9 months of residency. You also have access to letting relief that can be increase your allowance by up to £40,000. Plenty of examples on the ‘cutting tax’ board, also the gov page is quite straightforward with examples:

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

iane15

Thanks for the replies. I assumed we might still be liable, but a liability reduced by the time we spent
living there.

silvercar

If you want a quick estimate, post the purchase price, the value now, the date you bought and how long you intend renting it out before selling.

silvercar

Also you say “our residence” if it is in joint names you both have a capital gains allowance.

Keep_pedalling

silvercar said:

Good move as it reduces the liability. Basically calculated in proportion to the time it was your home plus the last 9 months of residency. You also have access to letting relief that can be increase your allowance by up to £40,000. Plenty of examples on the ‘cutting tax’ board, also the gov page is quite straightforward with examples:

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

It’s the last 9 months of ownership not 9 months of residency. In this case the OP will only be able to claim whatever length of time they occupy the home or 9 moths if the occupation is less than that as their occupancy will coincide with the final months of ownership. 

theartfullodger

iane15 said:

I have two properties, one is our main residence and the other a small buy to let. We are selling our current home and moving into our rented property until such time as we are able to find a new main home. Will we be liable for capital gains tax when we eventually sell what is now a second home after having used it for six months to a year as our main home after selling the original main home?

Depends on the CGT rules then: Nobody knows what they will be, even chancellor Jeremy *unt.

MBdriver

We have a similar issue but not quite the same. We have two properties, both owned for over 20 years, and we plan to move from our main home (of 36 years) into our second home, then sell the original (36years) home. We do not intend to move any further. What constraints are there on the selling timescale? Specifically, if we move, then the 36years home takes say 6 months to sell, will that count during that period as a second home and thereby attract CGT on the sale? How do we avoid this happening? Thanks for your thoughts.