How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask taxadvisor.uk Your Own Question

taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

Dear All I bought an off plan property before. I am wondering

Resolved Question:

Dear All

I bought an off plan property before. I am wondering what kind of tax I will have to pay if I sell it before completion? Will it be income tax or capital gain tax? What the level would I have to pay? If it is too much tax, I am thinking of moving in for a few months before I sell to exempt the tax. Can I exempt all the tax if I move in and make it as my main home? How long do I have to live there until I sell to exempt all tax?

Best Regards
Josh
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

If you sell the property before completion your gain would be chargeable to capital gains tax. CGT rate of 18%, 28% or a combination of both depending on your total income in the tax year of sale. You will claim gains annual exemption against the gain (£10,900 in 2013-14) and the balance would be chargeable to CGT.

If you move into the property when completed and make it your main residence then all gain on sale of it would be exempt as covered by private residence relief. There is no set time that you should live in the property but it would be prudent to stay at least 12-18 months.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Hi


 


Thank you for your answer. I currently earn 40k an year. Does that mean I will pay 28% tax on the profit if I sell now?


 



Also, I have another property which I currently live in. It is my only and main residence now. If I decide to move to the new one, what happens if I sell the current one I live in after I move to the new one?


My understanding is I don't need to pay any tax on the one I live in now if I sell it within 18 months after I move out even if I let it out after I move. Is it correct? How do I prove it has been my only and main residence? I don't keep any bills so I don't know how I prove to HMRC.


 


Best Regards


Josh


 

Expert:  taxadvisor.uk replied 2 years ago.
Josh, thank you for your reply.

If you are currently earning £40k, your taxable income after personal allowance becomes (40,000-10,900) 29,100. Based on this you would pay CGT at 18% on first £2,910 of gain and the rest would attract tax at 28%.

From 6 Apr 2014, your final 18 months of ownership would be exempt provided the property being sold has been your only and main residence at some point during the period you owned it.

If you decide to move to the new built property then you have a period of two years from the time you buy the second property to notify one of them as your main residence.
Your mail must be coming to your current residence, you must be registered at the local Council for Council tax and voting purposes. You may also be getting your correspondence from HMRC at this address. Start saving the bills.

I hope this is helpful and answers your question.
Customer: replied 2 years ago.

Hi

 

Thanks

I have some final questions.

 

"If you decide to move to the new built property then you have a period of two years from the time you buy the second property to notify one of them as your main residence."

 

Do you mean from the time I reserved the offplan property or from the time I have full ownership of it?

 

The off plan will complete in August

I am wondering if the following would work the best for me.

 

1. I move to the new property in August.

2. Sell the current one to exempt the tax

(What is the latest time I sell the current one to exempt the tax?)

3. After that I move to the new one and make it as the main residence then sell it an year after to exempt tax.

 

Does it work this way?

 

Best Regards

Josh

 

 

 

Expert:  taxadvisor.uk replied 2 years ago.

 

I have some final questions.

 

"If you decide to move to the new built property then you have a period of two years from the time you buy the second property to notify one of them as your main residence."

 

Do you mean from the time I reserved the offplan property or from the time I have full ownership of it?

[a]

From the time of completion and taking ownership.

 

[q]

The off plan will complete in August

I am wondering if the following would work the best for me.

 

1. I move to the new property in August.

2. Sell the current one to exempt the tax

(What is the latest time I sell the current one to exempt the tax?)

 

[a]

If you sell the current property before end Jan 2016 there will be no CGT on gain made.

 

 

3. After that I move to the new one and make it as the main residence then sell it an year after to exempt tax.

 

Does it work this way?

 

[a]

You can only have one main residence at any one point.

Once you have made the new property your main residence and then decide to sell it after one year then it would be exempt from CGT.

 

I hope this is helpful.

 

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

 

 

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and 2 other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.
Your reward of a bonus is greatly appreciated.

Best wishes.
Customer: replied 2 years ago.

Hi


 


I still have question regarding to this answer


 


[a]


If you sell the current property before end Jan 2016 there will be no CGT on gain made.


 


 


The way you work out the date is based on if I move to the new flat in August plus 18 months, right?


 


Does that mean I can still have full tax exemption even if it is not my main residence from August 2014 and I let it out during August 2014 to January 2016?


 


Best Regards


Josh

Expert:  taxadvisor.uk replied 2 years ago.
Josh, thank you for your note.

Once you move out to the new property in Aug 2014 and make it your main residence you will have full exemption on the current property provided it is sold by Jan 2016, because the property was your main residence at some point during period of ownership.

I hope this is helpful.
Customer: replied 2 years ago.

Hi

 

I still got questions but I don't know how to tip or pay you> please let me know and I am happy to pay.

 

I hope you still remember my situation

I have a current flat which is my main and only residence since 12/2010.

I will own another new flat when it complete in 08/2014.


From our previous conversation, I know that I can exempt all tax if I sell my current one by 01/2016.

 

My questions are:

 

I will make my new home as my main residence in August.

Does HMRC automatically treat my current home as my main and only residence until I nominate the new one in 08/2014?(Because it is my only property from 12/2010 to 08/2014)

 

Does that mean if I sell both properties at the same time before 01/2016?

 

Let's say I sell both properties in 08/2015 then do I exempt all tax from both properties (because my current one is my main residence now and the new one will be my main residence after 08/2014)?

 

 

Best Regards

Josh

 

 

 

 

 

Expert:  taxadvisor.uk replied 2 years ago.
Josh, thank you for your additional question.

You can pay me by accepting the answer. If it does not work, you will have to liaise with JustAnswer admin/customer sevices and authorise payment.

I have been out of the country and anly arrived back this morning.
I will revert to you in the next 24 hours.

Many thanks
Customer: replied 2 years ago.
HiThanks for your reply. I have got the answer from another accountant so it's ok now. Thanks!Best regardsJosh
Expert:  taxadvisor.uk replied 2 years ago.
Thanks Josh

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions