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Posted Mon, 26 Feb 2024 10:59:49 GMT by George Roberts
To date I have received conflicting advice from various sources on this matter but I hope that you can give me a definitive answer, please? I bought my current home in 1986 for £56,000 and it is now worth approximately £450,000. So its value has increased by around £394,000. If I were to buy another main residential home before I had sold and disposed of my current one would I be liable for Capital Gains Tax on the £394,000? I have lived in my home for 38 years constantly and have never sublet it or used it for business purposes. Some sources imply that I would be eligible for full Private Residence Relief (PRR) and therefore pay NO CGT, provided that I sold my current old house within 9 months of buying another? However, others state that I would be liable for full Capital Gains Tax on the profit that I had made? I would be most grateful if you could clarify the situation with this matter, please?
Posted Tue, 27 Feb 2024 15:14:32 GMT by HMRC Admin 32

If house 1 has been your only and main residence for the whole period of onwenrship, you are entitle to full private residence relief and no capital gains would be due.

However, if it took longer than 9 months after you departed/bought another property, then there may be a gain to pay.

Private Residence Relief (Self Assessment helpsheet HS283)

Thank you.
Posted Tue, 27 Feb 2024 15:48:45 GMT by George Roberts
HMRC Admin Thank you for your helpful response but so that I can be absolutely clear on this important matter I would appreciate confirmation. Can you confirm that I WOULD be eligible for FULL PRIVATE RESIDENCE RELIEF (PRR) and therefore pay NO CAPITAL GAINS TAX, provided that I sold my current old house within 9 months of buying another (the new one)? If so, how would I claim FULL PRR?
Posted Wed, 28 Feb 2024 11:54:39 GMT by HMRC Admin 10
If you purchase a second property, while still owning the first, you would need to declare which is to become your main residence and from which date.  If the date the other property becomes your main residence, is within 9 months of disposing of the first residence, then the rules on private residence relief will allow a further 9 months to add to the period of main residence of the first property.  The additional 9 months may result in no capital gains tax being payable on the disposal of the first property.
Posted Wed, 28 Feb 2024 12:36:13 GMT by George Roberts
HMRC Admin Thank you for your latest reply. To clarify: NO CAPITAL GAINS TAX on my old home (my sole residence for 38 years, FULL PRR) AND, after buying my new main home, FULL PRR for up to a further 9 months (NO CAPITAL GAINS TAX) until I sold my old one?
Posted Thu, 29 Feb 2024 11:01:50 GMT by HMRC Admin 19

That is correct.

Thank you.

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