CGT calculation on 2nd home

Jeremy535897

mybestattempt said:

I agree that all the implications of having beneficial ownership of a property where the legal owner is a close family member is a bad idea, especially when the beneficial owners, already in their mid 70s, intend to move into the property in a few years time.

Yes, it would be a gift with reservation, and so remain in the estate, but not benefit from the capital gains tax free uplift on death. Assuming that the new house will remain in the ownership of the buyers until death, capital gains tax is unlikely to be an issue even if there is a period of ownership when the house is not the main residence.

malcb60

p00hsticks said:

malcb60 said:

My query is about the CGT liability.  My belief is that there will be no liability for our present home (as our main residence) and the CGT liability will arise on the 2nd house and will be based on the difference we pay for it now and the value it has achieved when we finally do move in.
As a complete amateur in these matters - I would be most grateful if someone more compentent than I am could confirm my understanding is right - or correct me, if necessary!

You are correct in the first statement - no liability on your current residence as it will stay as your main residence until you sell it.

 CGT on the new residence would only become a consideration if and when you later sold it - assuming the rules stay the same, it would be based on a proportion of the difference between the buying and selling price, the proportion being determined by how long you had it as your main residence compared with how long it was rented out. You would be able to offset any buying and selling expenses and whatever CGT allowance is around at the time.

Thank you - that clarifies precisely and was confirmed when I worked thro the online calculation.   Just the help I was hoping for.