capital gains on family home

A question about : capital gains on family home

Family home owned 40 years.

Now want to buy a new home.

Will buy new home without mortgage and without selling first home.

First home to be occupied by family members for about a year before selling it.

If the owner of the first home moves into the new property, how long have they got to sell the first home before Capital Gains is payable on it?

Should they remain registered at the first home until it is sold in order to avoid CGT?

Best answers:

• 18 months. If the owner moves into the new home from day one then this should be the de facto 'Principle Private Residence' (PPR) but you might want to put in an election as such to HMRC to avoid the possibility of a chargeable gain on the second property, if sold in the future (assuming it remains as PPR throughout ownership).
  Even if the new home is held for a little longer than the 18 months, there is unlikely to be any Capital Gains Tax (CGT) to pay due to the CGT exemption.
• rather than running off on flights of fancy about setting up property companies you need to learn the basics of private residence relief and letting relief first
  https://www.gov.uk/government/public...ment-helpsheet
  first home retained by original owners
  - sell within 18 months = no CGT
  - sell after 18 months CGT liablity = gain - exemption period of time lived in + 18 months / total time owned. As the property has been owned for 40 years the rule is the gain starts from its value in March 1982, so if sold in March 2017 that would be 432 months ownership. Suppose you move out in March 2015 that is 24 months before sale meaning your exempt period is March 82 - March 15 = 408+18= 426 months leaving 6 months liability
  Suppose the gain from 1982 - 2017 was Ј1million the CGT liability would be: Ј1m - exemption (Ј1m x 426/432) - personal allowance (currently 11,000) = Ј2,889 taxable gain , tax payable (worst case all at 28%) is Ј809 yes eight hundred and 9 pounds on a house you sold for > Ј1million
  first home retained by original owners and let after they move out
  - exempt for the period lived in + 18 months
  - gets letting relief of up to Ј40,000
  you do the maths and do the basics before you start running ....