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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17223
Experience:  International tax
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. I'd like to know what taxation is applicable if I sell

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Hello. I'd like to know what taxation is applicable if I sell (downsize) and buy a smaller, lower value flat. The flat is my only home, never been used for business other than kitchen/office at home costs etc -ie no exclusive use for business. Downsizing will give me between 50k and 150k of cash, selling at 680k. If I am eligible for private resident relief on this transaction (I believe so) I'd like to know if this cash surplus is otherwise liable for tax? I am self employed, own the property outright, earn about just 12k per year and predict you will say that it will be taxed as income ie at 20%, after allowances. However, I am hoping that the private residence relief may actually mean the entire proceeds are not liable for tax at all...? (I'd like to pay for this question answered by paypal). Thank you. J Fry
Hello and thank you for allowing me to assist you.
You would be allowed private residence relief which means you do not pay tax on the surplus.
You are not required to replace your home with another home to have relief from capital gains tax on the sale.
You are entitled to full relief on the sale as long as :
the dwelling house has been your only or main residence throughout your period of ownership, and
• you have not been absent, other than for an allowed period of absence or because you have been living in job-related accommodation, during your period of ownership
• the garden or grounds including the buildings on them are not greater than the permitted area, and
• no part of your home has been used exclusively for business purposes
during your period of ownership.
I sincerely ***** ***** is helpful to you.
Customer: replied 3 years ago.

Thank you. To clarify if I may, and I accept the criteria you detail, but not only is the surplus free from capital gains tax, you are saying in the first sentence that it is free from tax altogther? It just seems too good to be true - hence clarification! With thanks, Jeremy

Yes, I can see how it would seem too good to be true as it would seem everything is taxable now.
There is no tax to pay on the sale of your home. If you meet the requirements I stated above the gain would be completely tax free.
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