Capital gains tax: selling family home to move into inherited one

breaking_free

Hi there.

Asking for my partner. He inherited his mother's house last year and is currently renovating it. Once it is finished he will move in then sell his own home. Mother's home was her primary residence and partner's home is his primary residence - neither have ever been rented out.

Once he sells his own home will there be any capital gains tax to pay? He will put his home on the market as soon as he moves into his mother's home (early next year). If it makes a difference, he is currently paying two lots of council tax as he's held onto her home for over a year now.

km1500

I believe he has nine months to sell his old home before capital gains tax may become due 

ie he can have two primary residences for that overlap period

if he goes over the nine months holding the two properties then capital gains will be due on his first primary residence sale calculated by apportioning months ie the number of months he has lived there as his primary residence versus the number when he was living in the new property with obviously the nine months counting as primary

breaking_free

Thanks @km1500, that is my understanding too. Was hoping someone would confirm this.

Brie

Wouldn't the solution be that he continues to live in his home until the sale is as good as done?  Saves any rushes to sell at a lower price.  He's essentially selling it as empty as he can firmly and honestly say that he's got somewhere else to move to.

theartfullodger

Depending on value of inherited property when becoming owned to value when moving in there may or may not be CGT to be paid.  Suggest getting accountants/solicitor professional advice.

(Inherited late brother's house with sister when he died intestate, eventually - hardly touched since 1971 - sold and we paid CGT - as well as IHT..)

Good luck!

Bookworm105

theartfullodger said:

Depending on value of inherited property when becoming owned to value when moving in there may or may not be CGT to be paid.  Suggest getting accountants/solicitor professional advice.

OP states mother's house not yet occupied as "currently renovating it". Therefore, as less than 24 months has passed since death, he should qualify for the first 24 months of ownership rule. What evidence is needed of "refurbishment works" is a different matter:

Period of absence

Some periods when you were not using the house as your only or main residence will still qualify for relief. These should be treated as periods of actual occupation when you’re calculating the fraction of any gain that qualifies for relief.

If, for up to a period of 24 months you do not occupy your new home when you acquire it because you’re unable to sell your old home, or you need to carry out refurbishment redecoration or alterations, you can treat up to the first 24 months as if the house had been your only or main residence in that period. 

HS283 Private Residence Relief (2024) - GOV.UK

CG65000 - Private residence relief: delay in taking up residence: Disposals on or after 6 April 2020 - HMRC internal manual - GOV.UK

breaking_free

Bookworm105 
I did not know about this and it certainly is worth looking into. Many thanks.