PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Capital Gains question for when buying a new home before selling old one

The scenario is that I am considering buying my new home before selling my old one.

My question is this: Is there a time period within which I need to sell my old home to avoid paying capital gains tax? The internet is not being helpful and getting through to HMRC is a pain. I understand there is (or was) a 'grace period' during which CGT would not apply if my old home was sold within it.

Does anybody know if the grace period still exists, and if so how long it is please?

Many thanks for reading!

Comments

  • RAS
    RAS Forumite Posts: 31,942
    Part of the Furniture 10,000 Posts Name Dropper
    Forumite
    Capital gains won't be an issue if the old house was your primary residence for the whole time prior to purchase of the new one, plus 9 months. Currently, there is also £6k disregard as well, but that is reduce from April 2024.
    The person who has not made a mistake, has made nothing
  • Pumpkin53
    Pumpkin53 Forumite Posts: 6
    First Post
    Newbie
    Thank you RAS that's exactly the information I was after.
  • dimbo61
    dimbo61 Forumite Posts: 13,686
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forumite
    If you own 2 homes you pay the Extra Stamp duty rate which you can claim back provided you sell your old home within a set time.
    Google Stamp duty 
    No Capital gains tax to pay at all provided its your main residence ?
  • Pumpkin53
    Pumpkin53 Forumite Posts: 6
    First Post
    Newbie
    Thanks dimbo61. You can claim back the extra 3% of stamp duty land tax so long as you sell your old home within 3 years as I understand it. But you do have to pay capital gains if your old house doesn't sell quickly unfortunately. And as RAS pointed out it appears you need to sell within 9 months of it going on the market otherwise HMRC will be in touch with a hefty bill.
  • Pumpkin53
    Pumpkin53 Forumite Posts: 6
    First Post
    Newbie
    Sorry, additional question. If I failed to sell my old house within 9 months would the capital gains be calculated on the whole of the difference between the original purchase price and the sales price? Thank you in advance/
  • Pumpkin53
    Pumpkin53 Forumite Posts: 6
    First Post
    Newbie
    ETA My old home has been my own residence for the 20+ years I have owned it.
  • RAS
    RAS Forumite Posts: 31,942
    Part of the Furniture 10,000 Posts Name Dropper
    Forumite
    edited 28 August at 8:24AM
    Pumpkin53 said:
    Sorry, additional question. If I failed to sell my old house within 9 months would the capital gains be calculated on the whole of the difference between the original purchase price and the sales price? Thank you in advance/
    It would be the basis for calculations.

    Say it takes 2 years to sell and remember that in 2 years there will be non disregard. If you sold this financial year, it's £6k.

    22 years x 12 months =.264 months ownership

    2 years x 12 months = 24 minus the 9 months leeway = 15 months

    So 15/264 =.0568

    Gain liable for CGT = Increase in value over 264 month x .0568 

    CGT is currently 18% or 28% depending on your tax rate.




    The person who has not made a mistake, has made nothing
  • Pumpkin53
    Pumpkin53 Forumite Posts: 6
    First Post
    Newbie
    That's great RAS, thanks again. I think I need to sit down and do some sums!
Meet your Ambassadors

Categories

  • All Categories
  • 339K Banking & Borrowing
  • 248.7K Reduce Debt & Boost Income
  • 447.6K Spending & Discounts
  • 230.9K Work, Benefits & Business
  • 601.1K Mortgages, Homes & Bills
  • 171.1K Life & Family
  • 244.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards