Best way to sell a second house?
Discussion
What is the best (and by this I mean reducing tax liabilities etc) of selling a second home? I've read about moving back in, back I can't seem to find out how LONG you need to move back in for before you can 'get away' without paying CGT?
Any other ways? Would diverting all your bills to that house for a period be sufficient?
Any other ways? Would diverting all your bills to that house for a period be sufficient?
The first is viable and something people can do. However, what would happen with the house you are currently in? That would cease to be your PPR (Principal Private Residence) and could itself become chargeable to CGT.
You are correct, there ARE no strict time periods specified in the legislation. I would suggest at least six months residency would be required to establish the second home as a PPR. However, that would still not give you FULL relief - although it might help.
Is the second house jointly owned?
Is it eligible for Indexation/Taper Relief
Is it eligible for commercial lettings relief?
Don't forget that for a singly owned asset, disposals under with gains less than £8,800 will attract no tax. Jointly owned properties can double this amount before taxable.
Merely having an address "deemed" to be your residence for tax purposes is technically fraudulent ad a criminal offence.
You are correct, there ARE no strict time periods specified in the legislation. I would suggest at least six months residency would be required to establish the second home as a PPR. However, that would still not give you FULL relief - although it might help.
Is the second house jointly owned?
Is it eligible for Indexation/Taper Relief
Is it eligible for commercial lettings relief?
Don't forget that for a singly owned asset, disposals under with gains less than £8,800 will attract no tax. Jointly owned properties can double this amount before taxable.
Merely having an address "deemed" to be your residence for tax purposes is technically fraudulent ad a criminal offence.
If you can prove that the second house is a "holiday home" then you can dump a huge % of the capital gains liability in only three years. I think it's 75%. There are various requirements for holiday lets, e.g., never let for >30 days at a time, available for letting 140 days a year, and let for 70 of them. Or something like that.
Step 1: Transfer you drivers license, mobile phone bills etc etc & get on council tax & electoral roll at 2nd house. This becomes your principle residence.
Step 2: Put 1st house on the market for unachievably high price (ie you don't really want to sell it)
Step 3 : after 6 months sell 2nd house (the one that has become your PPR) and 'move back' to the original house - because you just couldn't sell it.
If you don't do this every year, you will be OK.
Step 2: Put 1st house on the market for unachievably high price (ie you don't really want to sell it)
Step 3 : after 6 months sell 2nd house (the one that has become your PPR) and 'move back' to the original house - because you just couldn't sell it.
If you don't do this every year, you will be OK.
Right well its for my parents, its the house they lived in before their current house. They've been at the current house for 11yrs now. The 2nd house would be in both of my parents' names. Think it is eligible for taper relief as we lived there for 7-8yrs before we moved? But not sure on how this taper relief works, seems complicated :s
And about the CGT allowance, I know that helps, but we're talking 11yrs now and house prices have jumped a bit since then
And about the CGT allowance, I know that helps, but we're talking 11yrs now and house prices have jumped a bit since then
Seany88 said:
And about the CGT allowance, I know that helps, but we're talking 11yrs now and house prices have jumped a bit since then
After that period there are also a chunk of allowances you can use against the tax bill.
I would talk to a professional, you should save more than you would spend
As the prperty has been owned for over 11 years, a large part of the gain would be eliminated by Indexation (up to 5 April 1998) and Taper Relief would be applied after that date. As the property is owned by (presumabley) two people ( i.e your parents) then if the property is sold before 5 April 2007, £17,600 of the gain will be tax free (£8,800 x 2). This allowance will probbaly increase after 5 April 2007.
Prtetending that the property is or was something that it isn't or never has been (i.e. the main home or residence or a holiday let) is fraud and is a criminal offence.
Prtetending that the property is or was something that it isn't or never has been (i.e. the main home or residence or a holiday let) is fraud and is a criminal offence.
I would suggest posing the same question on www.taxationweb.co.uk/forum
You'd need to give more info such as exact purchase date, purchase price and expected sale price.
If you could ive there for a while it would be of great financial benefit but the length of time that your parents have owned it will greatly reduce the amount of cgt.
If you don't want to join taxationweb, you can email me the details in confidence (but your details will be posted on a public forum other than this site - but under my username which is different to the my PH username) and I can e-mail you the details and/or arrange for any replies to be sent directly to your e-mail address.
Personally I think your cgt liability will not be too bad because of taper relief but it largely depends on how much capital gain the property has made.
You'd need to give more info such as exact purchase date, purchase price and expected sale price.
If you could ive there for a while it would be of great financial benefit but the length of time that your parents have owned it will greatly reduce the amount of cgt.
If you don't want to join taxationweb, you can email me the details in confidence (but your details will be posted on a public forum other than this site - but under my username which is different to the my PH username) and I can e-mail you the details and/or arrange for any replies to be sent directly to your e-mail address.
Personally I think your cgt liability will not be too bad because of taper relief but it largely depends on how much capital gain the property has made.
Interesting thread as I'm in this situation myself. Can someone confirm that there is no CGT liability if the second property is sold within 3 years of buying your other (and consequently main) property?
Need to decide whether to dump the second property before the three year deadline or stick in there for the long haul and accept the CGT...
Many thanks,
Chris
Need to decide whether to dump the second property before the three year deadline or stick in there for the long haul and accept the CGT...
Many thanks,
Chris
Chris_w said:
Interesting thread as I'm in this situation myself. Can someone confirm that there is no CGT liability if the second property is sold within 3 years of buying your other (and consequently main) property?
Need to decide whether to dump the second property before the three year deadline or stick in there for the long haul and accept the CGT...
Many thanks,
Chris
Need to decide whether to dump the second property before the three year deadline or stick in there for the long haul and accept the CGT...
Many thanks,
Chris
Yes you will not have to pay a penny in cgt if you sell within 3 years of your second property ceasing being your pronciple residence.
Do the maths but i'd rather sell before cgt liability kicks in and invest in another (needing diy). I have the same situation. I'm moving into my btl next year and am wondering whether to sell my place or rent it for a while. I don't think I will go over the 3 years because I don't want to keep pretty much every penny I own in a property I don't live in. There comes a time when you need to cash in and move on to the next investment, or use the capital to enable you to live in a larger home, IMO. The question is when
M400 NBL said:
Chris_w said:
Interesting thread as I'm in this situation myself. Can someone confirm that there is no CGT liability if the second property is sold within 3 years of buying your other (and consequently main) property?
Need to decide whether to dump the second property before the three year deadline or stick in there for the long haul and accept the CGT...
Many thanks,
Chris
Need to decide whether to dump the second property before the three year deadline or stick in there for the long haul and accept the CGT...
Many thanks,
Chris
Yes you will not have to pay a penny in cgt if you sell within 3 years of your second property ceasing being your pronciple residence.
Do the maths but i'd rather sell before cgt liability kicks in and invest in another (needing diy). I have the same situation. I'm moving into my btl next year and am wondering whether to sell my place or rent it for a while. I don't think I will go over the 3 years because I don't want to keep pretty much every penny I own in a property I don't live in. There comes a time when you need to cash in and move on to the next investment, or use the capital to enable you to live in a larger home, IMO. The question is when
Thanks for the confirmation, means I have another 18 months yet. I'll check out the link above for more CGT info.
M400 NBL said:
I would suggest posing the same question on www.taxationweb.co.uk/forum
You'd need to give more info such as exact purchase date, purchase price and expected sale price.
If you could ive there for a while it would be of great financial benefit but the length of time that your parents have owned it will greatly reduce the amount of cgt.
If you don't want to join taxationweb, you can email me the details in confidence (but your details will be posted on a public forum other than this site - but under my username which is different to the my PH username) and I can e-mail you the details and/or arrange for any replies to be sent directly to your e-mail address.
Personally I think your cgt liability will not be too bad because of taper relief but it largely depends on how much capital gain the property has made.
You'd need to give more info such as exact purchase date, purchase price and expected sale price.
If you could ive there for a while it would be of great financial benefit but the length of time that your parents have owned it will greatly reduce the amount of cgt.
If you don't want to join taxationweb, you can email me the details in confidence (but your details will be posted on a public forum other than this site - but under my username which is different to the my PH username) and I can e-mail you the details and/or arrange for any replies to be sent directly to your e-mail address.
Personally I think your cgt liability will not be too bad because of taper relief but it largely depends on how much capital gain the property has made.
Thanks for the offer Gary but I'm still not sure of what my parents are going to do, I am trying to convince them this is the best way as I don't think they need the hassle anymore but will be a while before even a hint of a decision will arise. If I do need i'll contact you though, cheers
Eric Mc said:
Prtetending that the property is or was something that it isn't or never has been (i.e. the main home or residence or a holiday let) is fraud and is a criminal offence.
Agree with this statement entuirely. However, I think the ways the government spend MY tax dollars is often fraudulent and criminal!!
Anyway, have a good New Year everyone!!
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