Is Capita Gains Tax due when you change your main residence

We bought our home - Flat 1 - in 2005. In 2008 we bought Flat 2 and rented out Flat 2. We are in the process of moving and buying a property - House 1 - which needs complete renovation and the builders estimate 6-12+ months for the work to be done. Our timescale is likely to be something like ... May 31 2025 Sell Flat 1 and buy House 1 with completion on the same day. Move into Flat 2 and designate this as our main residence with House 1 as our second property December 2025 or some date in 2026 Sell Flat 2 Move into House 1 which will become our only property Will we be liable to capital gains tax when we sell Flat 2? Is there a time scale for this type of house move?

I am aware that the dates are in the future but it would be useful to know what would happen using current regulations.

Not HMRC, yes there will be CGT on the sale of Flat 2, for the period prior to it becoming your main residence, from 2008 until you move in (plus final 9 months exempt). So, you add up the total months owned, and the total months lived in (and add 9). The calculation is then the net sale proceeds (after legals/estate agents etc) less the total cost in 2008 (including legals/stamp duty etc) to give the gain. The gain is then apportioned as exempt and liable by dividing the number of months lived in over the total months owned and multiplied by the gain, to give the exempt amount, and the other remaining amount (which will be the larger figure in your situation as more is liable than exempt) is liable to CGT after one years annual CGT allowance. All of the figures are divided by 2 if joint (and extra exemption). You must report the gain within 60 days of completion and pay the tax in that period also. Then, you must repeat these details on your SA forms (which you will have been doing as letting income prior) as when you complete the CGT reutn first you will estimate your income to determine CGT rates and you cant know exact income until after 5 April each year.

Hi john47 Singleton,
HMRC cannot comment on future events as legislation and/or plans may change.
Thank you.