Tax on a New Home

newbieni

Hi,

I'm hoping to buy a new home with my partner. Due to the condition of the new house, I will have to live in my current home for two months while repairs are carried out. I have one other rental property. What are the implications for this tax wise?

Grumpy_chap

newbieni said:

Hi,

I'm hoping to buy a new home with my partner. Due to the condition of the new house, I will have to live in my current home for two months while repairs are carried out. I have one other rental property. What are the implications for this tax wise?

So long as the "current home" is your (and your partner's) current PPR (Principal Private Residence) and the "new home" will be your (and your partner's) replacement PPR, then the higher rate stamp duty surcharge can be avoided.

The key word is "replacement" of PPR.

If the sale and purchase happen in the same day, then the SDLT surcharge is avoided entirely.

If, as you expect, the purchase happens before the sale, then the surcharge will be payable initially but can then be reclaimed when the current home is sold (subject to time limits).  You are talking about a couple of months, so well within the time limits.

I have assumed that the "current" home is owned and not rented - if the "current" home is rented, then the SLDT surcharge will apply.

In the context of selling PPR and replacing with new PPR purchased, the rental home is irrelevant.  Threads on here indicate that some Conveyancing Solicitors are not fully aware.

Bookworm105

the other tax implication is that the new home will be eligible for private residence relief against CGT because there is an exception made for a period of up to 24 months between its purchase and you physically taking up occupation of it if that gap is because of "works" being done to the new house meaning you must continue to reside in the old house. Therefore you will get CGT relief on both houses simultaneously

see "period of absence" section:
HS283 Private Residence Relief (2024) - GOV.UK

sheramber

Are you selling your current home or are you renting?

newbieni

sheramber said:

Are you selling your current home or are you renting?

Selling my current home. It's been my home for over 10 years with the exception of one year when I briefly moved in with my partner during COVID.