Keeping existing home while renovating new home

Flower1976

Looking for some information to help us make some decisions please.

My mother owns her house outright.

She would like to move and has found a property but it needs a lot of work.

She has enough cash to buy the new house and complete the renovations.

Would she be able to live in her existing house while the work is being completed then move in when it is ready? Then sell her existing house? Are there tax implications of doing this?

I have been looking online to find the official answer but have failed to find anything.

Thanks in advance.

Flugelhorn

she would have to pay the extra stamp duty of 5% but would get that back if she sold the first house within 2 years 

housebuyer143

It's 3 years, but yes, she has to pay the extra 5% stamp duty and possibly council tax on the empty house.

Rodders53

No problem.

Buy house pay 5% Stamp Duty premium for second home. https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

Renovate that home.  Move in.

Sell old home *. 
Reclaim the 5% stamp duty.


* Within three years of purchase of the second home.  https://www.gov.uk/guidance/apply-for-a-refund-of-the-higher-rates-of-stamp-duty-land-tax

Flower1976

Thank you. I will have a read.

Do we need to consider capital gains tax at all?

Rodders53

Google tells me this...  https://community.hmrc.gov.uk/customerforums/cgt/aca15728-96d4-ee11-a81c-0022481aac05

So you need to complete within 9 months of moving out of home 1 into 2 to avoid a potential Gain.

Flower1976

So say she it takes 6 months to renovate the new house, She then moves into that new house. Am I reading right that she would need to sell her old house within 9 months of moving out? 

user1977

Flower1976 said:

So say she it takes 6 months to renovate the new house, She then moves into that new house. Am I reading right that she would need to sell her old house within 9 months of moving out? 

Well she doesn't need to, but there may be a capital gain to calculate for the period when she wasn't using it as her principal residence.

Flower1976

I think I understand.
While she is living in the old property there is no capital gain.
So if she stays in there until it is sold it’s not something she needs to think about.
The new house can stay empty until she’s ready to move in.

theartfullodger

She can own as many properties she likes, lives wherever she likes, but there are tax consequences..

Flower1976

theartfullodger said:

She can own as many properties she likes, lives wherever she likes, but there are tax consequences..

That’s what I am trying to understand