Hello all
I'm looking for some advice if anyone can help.
We're looking to sell our house & buy another (we live in England). We own our current house outright & to reduce hassle we are wondering if it's possible to use our savings to buy outright the next house & then sell our current home, without incurring any penalties ?
We've heard mention of incurring capital gains tax & things like that.
Whatever house we move to would be our main residence & we're not looking to do anything else but buy the next one & flog ours so we can bank the money from the sale.|
Is this possible without incurring any penalties etc?
Any advice or input, very much appreciated.
Thanks
CGT is not your only concern their would be an additional stamp duty liability as the new home you purchase before selling existing house would mean it would be considered a second property and 3% stand duty would be applied, though you may be able to claim the additional amount back.
Have a read of the link below, hope it helps.
https://www.readysteadysell.co.uk/wh...efore-selling/
Easiest and cleanest way would be to sell before you buy.
I believe in England you'll have to pay 3% stamp duty on the full value of the new/second house (4% here in Wales). If you sell your existing house within 3 years of buying your new home you can claim the extra stamp duty back. I stand to be corrected.
There isn’t any issue with CGT on your main residence and as said above you’d have to pay the additional 3% stamp duty on the purchase of the 2nd home but you can claim it back when you sell the old home.
So the plan is a good one with no downsides.
It’d certainly make a house move considerably less stressful!
Massively so. Right down to the logistics of moving existing furniture etc, buying new, or getting rid of old.Originally Posted by mr noble
I think the only minor risk of accruing a CGT liability is if, by happy chance, during the time you owned both houses they both made a capital gain (during those particular weeks/months), you would have to pay tax on the gain on one of the gains. But assuming you will sell your home soon after the new purchase and given that you have an annual CGT allowance, it's unlikely. And even if you did, you wouldn't be worse off because of it.
This is correct and it actually works ( it did for me)
Good, I hope to be in that position on the next several years or less.
This is it.
Just done the buy now hope to sell later thing myself. Its not the market it was.
I believe there's no capital gains issue if you sell the old house within 9 months, used to be 18.
It's a bit more complicated that that though. Sale price - bought price is your total gain, divide that by the months you've owned it gives gain per month. You don't pay any CGT on the number of months you lived in it, plus an extra 9, any more and you pay tax on those
Last edited by Brighty; 29th September 2023 at 22:34.
Having just done this, that is spot on.
Main one seems to be the stamp duty impact. You will have to pay an additional 3% as mentioned above, and you can reclaim if you sell your original property within 3 years it seems. Further details here: https://www.gov.uk/stamp-duty-land-t...property-rates
Hello
Some great input here, thanks very much for it & any links etc, it is much appreciated
One thing I might add is, we've had the house we're currently in 20+ years so the profit we make on it will be pretty big. Would that impact on Capital Gains Tax as i've seen things quoting several thousands of pounds needing to be paid when we sell it, if we went down the buy another house first & sell ours afterwards route?
I get the Stamp Duty stuff & i'm prepared for that, it's just any CGT on the existing house when we flog it (& make a profit) as per above that i'm wondering about ?
Thanks
That’s been explained above; there’ll only be CGT if it doesn’t sell within nine months of your new purchase and then only on a pro rata basis for the months over the nine months.
So if you’ve lived there for twenty years (240 months) and sell ten months after you bought the new house, you’d be liable for 1/250th of the difference in sale price and purchase price.
I think you also have an annual CGT allowance so unless the amount due is above the allowance then you’d still not owe anything.
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