Tax implications of temporarily owning 2 homes

completelybroke

Hi
We are hoping to relocate and downsize but wish to stay put until our children have left their 6th form and completed this stage of their education. 
We have been keeping an eye in our preferred relocation area and have seen an amazing property but obviously we are not ready to move yet.
If we were to purchase a property now that we would relocate to because we don’t want to miss out of what we consider ideal and our ‘perfect’ last home but don’t move into it because we need to stay put in our current home for now what would be the tax implications when we sold our current home. 
We have no intention of having this home and a ‘holiday’ home, but would the overlap be considered that we have a holiday home?

Any help/advice gratefully received 

_Penny_Dreadful

completelybroke said:

Hi
We are hoping to relocate and downsize but wish to stay put until our children have left their 6th form and completed this stage of their education. 
We have been keeping an eye in our preferred relocation area and have seen an amazing property but obviously we are not ready to move yet.
If we were to purchase a property now that we would relocate to because we don’t want to miss out of what we consider ideal and our ‘perfect’ last home but don’t move into it because we need to stay put in our current home for now what would be the tax implications when we sold our current home. 
We have no intention of having this home and a ‘holiday’ home, but would the overlap be considered that we have a holiday home?

Any help/advice gratefully received 

The purchase of the new property will be subject to the higher rate of SDLT, LBTT or LTT depending on where in the UK the new property is located. You may not be able to claim back the additional SDLT/LBTT/LTT depending on how long you leave it between buying the new property and selling your current property. 

You should check the local authority’s council tax rules for second homes and empty homes in the new area as that can end up being costly. 

Capital Gains Tax when you eventually sell your current home won’t be an issue because it will continue to be your main home and therefore will receive the private residence relief when you come to sell. Unless the government changes the rules between now and then.  

jonnydeppiwish!

How long are you staying in your current property? I believe you have 3 years to reclaim the additional SDLT when moving from residence to residence 

SDLT_Geek

jonnydeppiwish! said:

How long are you staying in your current property? I believe you have 3 years to reclaim the additional SDLT when moving from residence to residence 

In order for the additional SDLT to be reclaimable it is important that at the time of the purchase of the new property there is an intention to live in it as the buyers' "only or main residence".  So your question is a good one.

They are grey areas as to how immediate the plan to move in needs to be.  Clearly there is some wriggle room if the new home needs work doing to it.  It is likely to be the wrong side of the line if the property is to be rented out first.  It might be a problem if the property is initially to be used as a holiday home, with a longer term intention to move into it full time.

completelybroke

SDLT_Geek said:

jonnydeppiwish! said:

How long are you staying in your current property? I believe you have 3 years to reclaim the additional SDLT when moving from residence to residence 

In order for the additional SDLT to be reclaimable it is important that at the time of the purchase of the new property there is an intention to live in it as the buyers' "only or main residence".  So your question is a good one.

They are grey areas as to how immediate the plan to move in needs to be.  Clearly there is some wriggle room if the new home needs work doing to it.  It is likely to be the wrong side of the line if the property is to be rented out first.  It might be a problem if the property is initially to be used as a holiday home, with a longer term intention to move into it full time.

We definitely would not rent it out, i suppose it would be difficult to show it wasn’t a holiday home for the overlap.

completelybroke

Good to know about the CGT.

We would be moving Midlands to East Yorkshire.


Thank you everyone for the very helpful advice. 

inkydolphin

This thread might provide some pointers on CGT: https://forums.moneysavingexpert.com/discussion/6374919/capital-gains-help