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

Pumpkin53

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!

RAS

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.

Pumpkin53

Thank you RAS that's exactly the information I was after.

dimbo61

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

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

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

ETA My old home has been my own residence for the 20+ years I have owned it.

RAS

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.

Pumpkin53

That's great RAS, thanks again. I think I need to sit down and do some sums!