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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I've just moved house and the new house cost less than I got

Resolved Question:

I've just moved house and the new house cost less than I got on the old one i.e. made a small profit. This is my main residence so I understand this profit isn't liable for CGT, but will I have to pay income tax on it? Will I avoid this if I pay the money straight into a pension fund?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. As long as the house you sold was your main home for the entire period of ownership or it was sold within 18 months of your moving out after a period of occupation by you since the date of purchase, there will be no Capital Gains Tax to pay. There is never income tax to pay on a capital gain. Take a look at HS283 here for more information on the main home and CGT. When you sell a residential property, the fact that you may buy another one does not necessarily provide an escape from CGT on the gain you made from the property you sold unless both properties are furnished holiday lets. Neither would a pension contribution come into play, though it may reduce the rate of CGT you pay. I hope this helps but let me knopw if you have any further questions.
Customer: replied 1 year ago.
Thanks - the property was my main home throughout, and the situation is very clear with regard to CGT. Can I just clarify that I would NOT have to declare the income from the sale (the profit element) in my HMRC tax return at the end of this year.
Expert:  TonyTax replied 1 year ago.
That's correct, though some taxpayers do. If you look at page 3 of the CG pages notes here, you will see there is a list of codes for the different tax reliefs which apply to capital gains. One of those is PRR for private residence releif where letting relief doesn't apply. I know people who work in tax who use that to justify disclosing a completely tax free gain on a residential property for a client which had been the main home of the the client for the entire period of ownership.
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Customer: replied 1 year ago.
That's fine - many thanks for your help
Expert:  TonyTax replied 1 year ago.
Thanks.

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