Simple CGT question.

Hi,

I am in the fortunate position of having inherited enough cash to move and buy a house before I need to sell my current house where I have lived for 25yrs. Since my current house is my Primary residence there is no CGT due on it as of today if I were to sell it.

However it would be much more suitable for us to use our cash to buy the next house whilst still holding onto the current house until we could complete any works on the new house. My reading of the CGT rules suggests that we would have a year to sell the current house before capital gains tax would become start to acrue on the sale of the old house, and then would only be on any gains in value from the point where we bought the new property to when we sold the old.

So if there was a 1year cross over period no CGT would be due, but if it were two years crossover then 1years CGT would be due.

wench

You are correct except for this part

and then would only be on any gains in value from the point where we bought the new property to when we sold the old.

The charge would be pro rata on the total gain. The value at the point of acquiring the new property is irrelevant, and even if the original property lost value in the final years of ownership, you could still owe CGT.

ismat

If you continue to live in your current house it will remain your PPR until you move to your new house irrespective of when you buy the new house

DFB-D

You can nominate any property you own and live in as your PPR for the purposes of this relief.

When buying a new property, there is a 2 year time limit to nominate a PPR.

However, as partial PPR relief will apply to the new property in the circumstances outlined (presuming you will reside there in the future): a practical limit to maintain full relief from CGT is 12 months before nominating the new property as your PR.