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propertylawyer
propertylawyer, Solicitor
Category: Law
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Experience:  Property Solicitor with expertise in commercial and residential property transactions.
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We currently own a flat where we live ( we have owned it

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Hi, we currently own a flat where we live ( we have owned it from new for more than 2years). We are now looking to buy a new flat (for school catchment purposes) for which we don't need to rely on the current flat being sold for deposit funds. However, we will sell the current flat shortly after we have moved into our new flat. What are the captial gains tax implications from the sale of the current flat ? Whats the most efficient way to do this ? We don't have time to sell current and then buy the new one.
Submitted: 9 months ago.
Category: Law
Customer: replied 9 months ago.
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Expert:  propertylawyer replied 9 months ago.

You will need to speak to an accountant about the cgt implications.

Cgt may apply, it depends on the acquisition value and the disposal price and whether any available relief(s). One thing you can do is ensure that you own the flat as tenants in common. This means that you will have separate and distinct shares and each owner can then make use of their annual exempt amount.

Have you considered the stamp duty land tax implications?

Under the new scheme your purchase would be subject to the additional 3% surcharge because at the point of purchase you already own a property. However, you can claim a refund of the surcharge if the flat is sold within 3 years of the purchase of the second property.

To avoid cgt and the Sdlt surcharge you can sell the flat simultaneously with the purchase of the flat. No need to pay additional taxes if you do not have to.

Do you have any questions or queries in relation to my reply? I am happy to assist further.

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Customer: replied 9 months ago.
Thanks for your reply. Just a clarification. What constitutes "selling simultaneously whilst buying" ? Does it mean that I need to have one mortgage at any point in time or can I take out a new mortgage for the new flat whilst my current flat is for sale and I close the mortgage when the sale happens ?
Our plan is to make an offer to the new flat and start with the proceedings of a new mortgage. Simultaneously put up our flat for sale which might take some time to sell.
Expert:  propertylawyer replied 9 months ago.

The mortgage is irrelevant. Your sale must complete on the same day as your purchase, if not you will be caught by the surcharge and will have to pay the additional 3% Sdlt.

Customer: replied 9 months ago.
Thanks very much. What about the capital gains ?
Expert:  propertylawyer replied 9 months ago.

There will be no cgt if you complete the sale and purchase on the same date, provided that the existing flat is your principle private residence.

propertylawyer, Solicitor
Category: Law
Satisfied Customers: 270
Experience: Property Solicitor with expertise in commercial and residential property transactions.
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