CAPITAL GAINS TAX IF I BUY ANOTHER HOME BEFORE SELLING MY CURRENT ONE (WITHIN 9 MONTHS)?

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?

Hi,

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.

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?

Hi
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.

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?

Hi,

That is correct.

Thank you.

Hi, I’ve recently built done a new build and i moved in. My previous property hasn’t sold yet. Do I have a deadline on when I need it sold before I pay capital gains tax?

Hi,

Whether there is capital gains tax to pay will depend on the values in the calculation minus private residence relief.  Please have a look at help sheet HS283
(HS283 Private Residence Relief (2024)).  There is also a capital gains tax calcultor at: Capital Gains Tax, to help work out your gain.  You can then move on to the next screen and  register, report and pay any tax due, within 60 days of the completion date.

Thank you.

Subject: Inquiry About Capital Gains Tax (CGT) on Property Sale Dear HMRC, I have two properties: the first one, purchased in May 2011, is located in Luton, and the second, bought in April 2023, is in Birmingham due to my work. My wife and daughter are still residing in Luton, as my daughter is currently attending primary school there. I live in Birmingham for work purposes since April 2023. We were unable to sell the Luton property earlier because my daughter did not want to leave her primary school, where she has established friendships, and my wife was doing her GP training in Luton. Now that my daughter is set to finish primary school in July 2025 and my wife has just completed her GP training, we plan to sell the Luton house by July 2025. After this time July 2025, my wife and my daughter will join me in Birmingham. I have a couple of questions regarding the sale of the Luton property: Will I be required to pay Capital Gains Tax (CGT) upon the sale of my Luton property? Or, will I qualify for Private Residence Relief and therefore be exempt from CGT, given that I have been living in Birmingham for work purposes since April 2023, my daughter will have completed primary school in Luton by July 2025, and my wife has now finished her GP training, allowing us to relocate to Birmingham? I would greatly appreciate your information on this matter. Thank you for your time and assistance. Kind regards,

Hi Luke,
Please have a look at the help sheet HS283:
 HS283 Private Residence Relief (2024).  
PRR applies for periods that the property was you main residence.  
As you have two or more properties, you have 2 years to nominate which property is your main residence. After this, HMRC will make the decision based on the facts of the case. CG64485 - Private residence relief: only or main.  
There is a calculator at: Tax when you sell property which will help you work out if a gain arises.  
You can then use the links to report and pay the Capital Gains tax.
Thank you.

Dear HMRC I currently have a property on the market where my buyer has pulled out. If I proceed and buy my next house I end up with 2 properties in the short term and an overall chunky mortgage. My understanding is if my current property sells within 9 months there is no capital gains to pay (money would be used to reduce mortgage on the second property - which would then be my only residence) What happens if my original house as an example took 15 months to sell - do I have to pay capital gains? Thanks

Hi Gary, I'm trying to find out the answer to that very question but having difficulty getting to the bottom of it. https://community.hmrc.gov.uk/customerforums/cgt/6d8005ef-2e87-ef11-9442-002248c8dc4f I have had a response on that post that suggests going over the 9 months isn't an issue but waiting for clarification as I don't understand the helpsheet. If I get a response over there, will post here. Kathryn

Hi Gary,
Possibly.
However as this is in the future we cannot give a definitive answer as legislation may change.
Thank you.

Dear HMRC I currently own a property in joint names with my wife (which is our main residence). She also has joint interest in another property from a previous relationship. We are in the process of selling the main residence. What is the position regarding CGT on my wife’s jointly owned second property if she were to sell her interest in it. Thanks in advance.

Hi Bwise,
Private residence relief (PRR) can reduce or eliminate the capital gains tax on the disposal of your main residence.  
Have a look at helpsheet HS283 HS283 Private Residence Relief (2024).  
As the other property is not your wife's main residence, PRR would not be due and a capital gain may arise if it is disposed of.
Thank you.

Hi If i have 2 property and second property was bought 10 years after now if i like to transfer the name to 1 child (18 years over) and after 5 years later i like to give another second property to my another child (18 years over) do i have to pay tax or does any of my children (18 years) need to pay any tax? Please let me know soon as you can,Thanks

Dear HMRC Admin: I purchased my main residence in May 2018, currently living in. July 2024 I purchased another(2nd) house for me and my family to live in. I thought it was a light refurbish. However I cannot see it finish/move in till July 2025. I got autism kid who cannot tolerate any disturbance around. If I am selling my current main residence (purchased in May 2018) after moving to the new house ( purchased in July 2024) which will be after July 2025 would I be liable for any CGT. I am aware the 9 month overlapping period will be expired by then.

Hi ased444 Saikd,
The gifting of the properties to your children will mean that you may be liable to capital gains tax when you gift the property to your child.
You willl find a capital gains tax calculator here:
Tax when you sell property
If there is tax to pay, you need to report it within 60 days of the completion date.
 At the end of the calculator is the option to create a capital gains account.
 You can use this accout to report and pay any capital gains tax due.
 You only need to open one capital gains account.
 When you log into the account, you can report any gains arising from the disposal of the second property.
Thank you. 

 

Hi Fei,
You would possibly be liable to Capital Gains Tax. You would need to work out how much Private Residence Relief you are entitled to. This and other allowable costs may cover your gain. If not, you also have £3000 annual exempt allowance to deduct. If this still leaves a gain, then there will be Capital Gains Tax to pay, within 60 days of the completion date. You can see guidance on Private Residence Relief here:
HS283 Private Residence Relief (2024)
and the Capital Gains Tax calculator here:
Capital Gains Tax
Thank you.

If I buy and move in to a new property before I sell my current home, will I be liable for capital gains tax on any profit made when I sell my current property? My intention is to sell my current property as soon as possible after the move?