No charges to pay on swapping main residence for 2nd home?

Shewy62

Hi, 

I am moving in to my current 2nd home, making it my main residence, and want to let out my current main residence. Both mortgage free. There is no sale etc, just a move, so is it ok to just inform various bodies etc re main address change once moved, there is nothing else I need to do, is that correct please? Just double checking. Sorry for the boring question. Thank you.

silvercar

I don’t see a problem, other than keeping clear evidence of the date of the swap for any future CGT liability.

Shewy62

Thanks for that silvercar. 

ThisIsWeird

I understand, but you'll need to confirm, that you have a 2 year window from the purchase date of the second (or subsequent) property in which to nominate which of your two properties is your 'main' home for CGT purposes.

The clock begins on the purchase of the second home, and restarts with any additional purchase. You need to have spent some time in the chosen property as your main residence - ie, you couldn't nominate a BTL property.

The above is general picked-up info, so is a basic understanding at best.

Shewy62

Thanks for that, I inherited this second property, it  is registered therefore with my council as a second home, (I pay full council tax for it as such) and everything else I have is registered to me at my main residence. If you do not nominate one of two properties as a main residence HM will if necessary judge it based on the evidence suggesting which has likely been your main residence.

Once I make the move I  will change it with the council to my main residence for and the other one will be registered as a let property, and I will inform HM of the new main address for tax purposes, and change address re driving license and other things.

Although with all the palaver re renting out, part of me is still thinking about moving, changing the status of main residence then just putting current main residence on the market to sell, which would mean I would have to pay CGT on the sale as it would then be a second home but I could use my CGT tax allowance against any profit  so that would reduce any payment I had to make on that. 

Food for thought.

Thanks. 

silvercar

Shewy62 said:

Thanks for that, I inherited this second property, it  is registered therefore with my council as a second home, (I pay full council tax for it as such) and everything else I have is registered to me at my main residence. If you do not nominate one of two properties as a main residence HM will if necessary judge it based on the evidence suggesting which has likely been your main residence.

Once I make the move I  will change it with the council to my main residence for and the other one will be registered as a let property, and I will inform HM of the new main address for tax purposes, and change address re driving license and other things.

Although with all the palaver re renting out, part of me is still thinking about moving, changing the status of main residence then just putting current main residence on the market to sell, which would mean I would have to pay CGT on the sale as it would then be a second home but I could use my CGT tax allowance against any profit  so that would reduce any payment I had to make on that. 

Food for thought.

Thanks. 

If your current main residence has been your main residence for most of the time you’ve owned it, there shouldn’t be a CGT liability, even if it is your second home when you actually sell it. 

Shewy62

Thank you Silvercar.

Yes my current main residence has been my main residence since I bought it. Is the CGT liability (or not as the case may be) to do with an allowance of so many months that can be claimed when you come to sell it even if a second home please? I have read this before but would need to look for it again to be sure. 

Many thanks.

Slinky

Don't underestimate how difficult it can be emotionally to rent out what has been your former home. Tenants will not keep it how you kept it. It is not the same as renting out a BTL property. Unless you are really able to detach yourself from your former home and see it as bricks and mortar, it might be easier just to get rid. We had 4 lots of tenants in our former home for 3 years before moving back in, and it was not easy to live with some of the things that happened to it just with other people getting on and living their lives.

silvercar

Shewy62 said:

Thank you Silvercar.

Yes my current main residence has been my main residence since I bought it. Is the CGT liability (or not as the case may be) to do with an allowance of so many months that can be claimed when you come to sell it even if a second home please? I have read this before but would need to look for it again to be sure. 

Many thanks.

It’s a linear calculation, basically you are exempt for the time it was your home plus the last 9 months of ownership as a percentage of the total number of months owned. You also have a CGT allowance.

Shewy62

Thank you for that Silvercar, that chimes with what I read before. 

Shewy62

Slinky said:

Don't underestimate how difficult it can be emotionally to rent out what has been your former home. Tenants will not keep it how you kept it. It is not the same as renting out a BTL property. Unless you are really able to detach yourself from your former home and see it as bricks and mortar, it might be easier just to get rid. We had 4 lots of tenants in our former home for 3 years before moving back in, and it was not easy to live with some of the things that happened to it just with other people getting on and living their lives.

Hi Slinky, yes thanks for that. It had occurred to me, it's a case of how I am likely to get hammered for taxes once the next government gets in. If I sell, I've got that money in the bank earning interest, which I will get taxed on, (I read on here that you get a 5000 allowance as well as the 1000 allowance??) or I could buy shares with it, which I would be taxed on, and that tax will go shooting up under Labour. Or I could keep the property, spend a bit to upgrade it, and let it out. More tax, which will go screaming up under Labour, but I would have the bricks and mortar and rent from it. Tricky.