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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13937
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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We have a large house in Sussex which we live in all week.

Resolved Question:

We have a large house in Sussex which we live in all week. We have lived their since 1997. We also have a smaller house in Gloucestershire which we are hoping to relocate to at the end of the year-ish. The housing market in our village in Sussex is white hot at the moment with houses selling within a week and without boring you with detail would be likely to sell within this timeframe for upto £600K. We have spent good money on the Sussex property over the years as it was in poor condition when we arrived (windows dropping out etc) - let us say £50K at least. Hubby earns £50K a year and I earn £20K a year if that has anything to do with it.
Where do we stand with regards XXXXX XXXXX if we sell the property?
Ditto but instead of banking the money we immediately buy other properties?
Should our Sussex house be this thing called a PPR? If so, how do we do this?
We pay full Council Tax on both properties but only vote in Sussex - does that help?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question, My name is XXXXX XXXXX I am one of the UK tax experts here on Just Answer.

Unless you have elected for any other property to be treated as your main residence, then the sale of this Sussex property, having been your main residence throughout will be exempt from capital gains - as it will automatically qualify for private residence relief (you do not need to alert HMRC of this fact as you are merely selling your home)
The main residence decision is based on the fact that you spend most of your time here - and I imagine conduct all aspects of your life there,and this is further supported by the fact you vote from the Sussex area.

This is regardless of what your choose to use the sale profits for - the total profit will be exempt.


The property is Gloucestershire however, if you ever came to sell, would give rise to a capital gain consideration, as from the time of purchase, until such time that you relocate here, this would not have been your main residence, so by the time you do sell, there will be this period of time, which will not qualify for private residence relief. However from the time you make this your main residence to the sale date (if you remain living here until such time that you sell) will form a partial exemption which is reflected by
The gain made x months this was your main residence/total ownership period

And any other property you choose to purchase, assuming these are not going to become your main residence at any time, but perhaps let - will be fully exposed to capital gains as these will not qualify for any tax reliefs.

Do note any rental income made, needs to be declared to HMRC as this is taxable income.

Thanks

Sam
Customer: replied 3 years ago.

Blimey. I know this sounds daft but are you sure as that is really very, very good news and hubby thought we were going to be clobbered hard for tax. Crikey.

Expert:  Sam replied 3 years ago.
Hi Linds

Yes I promise you this is the case - we never are charged tax on what is our own possessions (unless its fine art which is a collectible item - so have a tax charge on sale if in excess of a certain value)

I have added a link here to provide the legislation for you

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm

You can see it states
You don't usually have to pay Capital Gains Tax when you sell or dispose of your own home. This is because you get a relief called Private Residence Relief. You may have to pay Capital Gains Tax if you own more than one home or you use your home for business purposes

and then goes onto say

When you sell or dispose of your own home you won't have to pay any Capital Gains Tax if you satisfy two conditions. For the whole time you've owned it both the following must apply:
•it's been your only home or main residence
• you have used it as your home and nothing else

As this is the case with your Sussex property, the sale of that particular property does NOT give rise to any capital gain consideration.

So you can sell and enjoy the profits made :)
Thanks

Sam

Customer: replied 3 years ago.

You will have made my hubby's day! Smile xxx

Expert:  Sam replied 3 years ago.
Hi

That's lovely to know!

It would be appreciated if you could rate the level of service I have provided, as this ensures I am credited for my time - and if you have any further UK tax questions, please, do come back to Just Answer, and if you would prefer to ask for me, then just add that you wish "Sam Tax" to answer in your posted question.

Thanks

Sam
Customer: replied 3 years ago.

You are getting an Excellent Sam but you may have to tolerate one more "Are you sure?" from my hubby tonight (natural sceptic). This information makes a very great deal of difference to our plans going forward and means we can relocate sooner rather than later. Linds

Expert:  Sam replied 3 years ago.
Hi Linds

You can ask as many "are you sure" questions as needed - I fully appreciate the fact that both you and hubby want to be sure you have this right!

Thanks

Sam

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