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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13888
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am in the process of buying a new property which will be

Customer Question

I am in the process of buying a new property which will be in addition to my current home. I intend to rent out my current home & then sell it in the summer.
I intend to do up the new property I am purchasing, live in it & probably sell it it in the late summer of 2014 so I can raise more cash to buy my next property without requiring a mortgage.
Question: Will I be liable for Capital gains Tax if I do this or what is the qualifying period I need to live in the new property to avoid incurring CGT?.
I hope this is reasonably straight forward,
Many thanks for your advice & assistance,
Regards
Richard Gerard-Sharp
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi Richard

Thanks for your question. My name is Sam and I am one of the UK tax experts here on just Answer.

You will have 18 months from the time you move out of your current home, to sell and NOT incur a capital gain (this is change effective from 06/04/2014 from 36 months to 18 months)

Then with the new property - you will need to live in it throughout, and have all aspects of your life there, to qualify for private residence relief (making the sale exempt from capital gains) but if you do move out from it prior to sale, then again you will have 18 months from the time you love out, to the sale date to sell and NOT incur capital gains.

If either sale takes place more than 18 month after moving out from the property, then you will be entitled to private residence relief for the time you live there and the last 18 months of ownership, and if either property has been let out to tenants and rents declared to HMRC, then you are also due private lettings relief, which can allow up to a further £40,000 exemption.

And of course each tax year you have an annual exemption allowance - which from 06/04/2014 will allow the first £11,000 to be exempt, and from 2015/2016 this will rise to £11,100

Thanks

Sam

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