Selling main home of 22 years and moving into 2nd home

Hi, We are going to sell our main home now the kids have all flown the nest. We have owned the property since 2002 (mortgage free now). We bought and renovated a Welsh seaside property in 2020 (cash purchase) and paid 2nd home stamp duty. The original intention was to make it a holiday let but liked it so much we never rented it and want to make it our full time home once our main home is sold. Currently the 2nd home is in my wife's name only as the original intention was to let the property so made sense for tax reasons as she no longer works. We have done our main home nomination with HMRC within 2 years of purchasing the 2nd property. We are also just about to transfer the 2nd property into both our names. Q1. I assume there is no CGT on the main property sale. Q2. how does this effect the 2nd home status once we make it our main and only home, just thinking if we sold (no plans) but how long would we need to live there to ensure its defined as our main home and therefore exempt from CGT in the future?

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  • Jeremy535897
    Jeremy535897 Posts: 10,371
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    If your existing main home has been your main residence throughout your ownership, there is no capital gains tax on a sale. You can change your nomination to the Welsh property if you do live in it while still owning the original property (if within 2 years of the previous nomination), and so long as the original property is sold within 9 months of the change in nomination, there is still no tax to pay. You should read:
    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2023
    If you have a period where you only own the Welsh property (and don't rent somewhere else to live in) and you live in it, there should be no doubt that it is your main residence.
    You are too late to recover the higher rate stamp duty.
  • silvercar
    silvercar Posts: 46,730
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    When you eventually sell the welsh home, assuming that you do, you will have had a time 3+ years where it hasn’t been your main home, so there may be a CGT liability on that sale. How much will depend on the CGT rules at the time.

    Under current rules, it would depend on how long you owned it and the proportion of that time it was your main residence. For example, say you owned it another 17 years, total ownership would be 20 years so three twentieths of the gain would be liable to CGT. You each have a CGT allowance of £3000 (April 2024 figure) so £6k of the gain would be exempt. 

    No CGT on transfers of property between spouses and no CGT on death. 

    I do wonder if these sort of things sail under the radar as people often buy a property to do up before moving in, yet you don’t often hear of a CGT liability on sales decades later.
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