CGT and SDLT selling primary and moving back to Rental?

by Readers Question

3 months ago

CGT and SDLT selling primary and moving back to Rental?

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CGT and SDLT selling primary and moving back to Rental?

I purchased property A in 1992 (mortgaged) as our primary residence.

In 2004 purchased property B (mortgaged) and moved in as our primary residence to-date.

As of 2004 property A was then used as a rental till Sept 2017.

We plan to sell property B (our current primary residence since 2004) and then move back into property A which will then become our primary residence.

Are there any issues with CGT or Stamp duty. Both properties are mortgaged, but the sale of the current (B) will pay off both mortgages. No plans to move from property A in the short term but may sell in a few years time?

I have heard that there may be issues if we move into the old rental (A) before the sale of the current Primary (B) is completed?

Many thanks.
Andre



Comments

Neil Patterson

3 months ago

Hi Andre,

I can't see any Stamp Duty issues as you are selling and not buying unless you plan to move from A at a later date and buy a new main residence. Then you may be hit with the 3% SDLT surcharge.

If you only move out for a short period of time you will still get PPR relief for CGT and it is unlikely you will need to pay anything, but to be certain and depending on the gain and how long it takes to sell please see the HMRC calculator >> https://www.gov.uk/tax-sell-property/work-out-your-gain

Recardo Knights

3 months ago

Hi Andre,
B is you primary residence so selling it now leaves you with no CGT to pay. If you moved back to house A and rented B for a year or two before selling there will probably still be no CGT to pay, as the equity on the property brought in 2004 has increased there is a formula for working the CGT out on the amount of years you have lived their and the amount of time it is rented. You still have a Capital Gains allowance of about £11k to offset any tax ( £22k if in joint names). If you plan to rent house B for a short time speak to your accountant or go and see one.
Check through old postings as I remember Mark doing something on CGT when living and then renting the same house.
I am not an accountant but had a house for 21 years and lived in it for about 16 years then rented for about 5-6 years and only had a very small CGT to pay, compared to the increase in value over the time it was let out.

JPB

3 months ago

We moved out of our former residential property ‘ house 1’ and redeemed the residential mortgage outstanding and remortgaged into BTL, during the same process we took out equity from our original home and used that amount as a deposit for a new BTL house ‘house 2’ which we plan to move into in the future. SDLT was charged on the basis of a further 3% as we own multiple BTL, does anyone know if we paid this extra 3% SDLT, will we be able to ever get it refunded if we redeem house 2 by selling ‘house 1’ and move into it as our main residence.
We have effectively come off our residential status as we are currently living with a relative.


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