Would we pay CGT on this?

Turtle

Any help appreciated here - I've read up online but can't see anything that is the same as our situation so I'm hoping someone can help.

We bought house A in Feb 1999

We bought house B in Sept 2021, which needed full renovation

In November 2022 we put house A on the market and moved in to house B. When we complete on the sale of house A there will be an approximate gain of £200k. The house has never been rented out. Will we pay any CGT on the proceeds? I didn't think we would because we've moved from one primary residence to another, but someone else has suggested that we might, as we didn't buy and sell at the same time.

Can anyone help please?

Jeremy535897

If you lived in house A as your main residence from when you bought it until November 2022, then so long as it is sold within 9 months of moving out, any gain will be exempt. You should also be able to treat the period from September 2021 to November 2022 as exempt on any future sale of house B. See examples 4 and 6:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2022

Turtle

Thanks. I'm not really clear on example 4 (which I think is the one relating to the sale of house A) - what does this part mean? "A proportion of any gain you make from the disposal amounting to 159÷168 will qualify for relief". I know where the 159 and 168 come from, I just don't know how you use that to calculate what you'd pay tax on. We've owned house A for 290 months and been moved out for 4 months of that.

I think it's entirely possible that we won't complete on a sale within 9 months - it's already been on the market for 4 months and we haven't accepted an offer yet. If the gain wasn't entirely exempt, what would we pay/how is it calculated? Sorry if you think I'm being thick, I struggle with this sort of thing.

Alternatively, if my husband moved back in to house A for a couple of nights a week (it's very close by so this would be easy enough) and stayed there until completion, are the gains then exempt?

Jeremy535897

The bit you quote from example 4 is irrelevant to you. The bit that matters says:
If you had moved out of the house at some time after April 2021 instead of in 2009, your relief would not be restricted as this absence would have been during the final period of 9 months.
That is the part that is analogous to your situation.

Any gain is pro-rated over ownership, so if you make a gain of £200,000 after say 15 years (selling in February 2024), then all the period from February 1999 to November 2022 would be exempt, and so would the last 9 months (June 2023 to February 2024). Basically 6 months out of 180 months would be taxable, being 1/30th of £200,000, or £6,667. Your two annual exemptions of £6,000 each for 2023/24 would cover it.

A married couple can only have one main residence at a time, so it is no good splitting residences between you.

Turtle

Thank you very much - this makes sense now. Really appreciate it.