Have touched on this before but we are in need of numbers please.
We are moving to the coast and buying a house costing £700k.
At the same time we will be keeping our current house in town to finish the lease on our shop for a year.
We bought the town house in 2006 for £250 k and it’s now worth £550k.
There’s me and Mrs Zip , we’ve lived there full time and never rented it out.
We would live in town 3 nights a week and coast 4 nights.
Any idea of what cgt we would have to pay?
If you've lived here full time (ie primary residence) nothing as yet.
Say the coast house becomes the primary residence as of now
To work out out CGT livability take the price you sold the town house for,, when ever that is, and minus the £250k you paid for it. That is the gain. Then aportion it.
For an example, you sell it in two years time for £550k.
So you've made a gain of £300k over, by then, 22 years, but it was your primary residence for 20 of those 22 years (ie 2006 to now) So only 2/22 of that £300k is taxable, which is £27,272.
From that £27k deduct your CGT allowance (and maybe Mrs Zippy's too depending on ownership, marital status etc) £3k each unless special circumstances. So £21k is taxable. Pay tax on that £21k at whatever rate applies, depending on if you're a basic or higher rate taxpayer etc. At basic rate roughly £4k, at higher rate roughly £8k in this example.
Hope that helps.
We would live in town 3 nights a week and coast 4 nights.
You can only have one as your primary residence. Deciding which this is will probably have more to do with stamp duty, and possibly council tax depending on where the houses are, than CGT.
PS. I'm a few pints of cider in, so if someone corrects me probably best to go with them...
Also you can deduct the costs involved in buying and selling the property so estate agents and legal fees. You may also be able to deduct some home improvement costs if you have done any work on it. This is dependent on what you have done.
Brilliant, thanks.
That’s totally doable when you factor storage and alternative accommodation.
You live in one property, your missus in the other? ....well, on paper at least.
It's what stove of my aunts and uncles do. It's obviously a tax dodge and shadey, but it's what you got to do if you're in the unfortunate position of having more than one property.
Nice position to be in.
Loving your work andrewh
If you've lived here full time (ie primary residence) nothing as yet.
Say the coast house becomes the primary residence as of now
To work out out CGT livability take the price you sold the town house for,, when ever that is, and minus the £250k you paid for it. That is the gain. Then aportion it.
For an example, you sell it in two years time for £550k.
So you've made a gain of £300k over, by then, 22 years, but it was your primary residence for 20 of those 22 years (ie 2006 to now) So only 2/22 of that £300k is taxable, which is £27,272.
From that £27k deduct your CGT allowance (and maybe Mrs Zippy's too depending on ownership, marital status etc) £3k each unless special circumstances. So £21k is taxable. Pay tax on that £21k at whatever rate applies, depending on if you're a basic or higher rate taxpayer etc. At basic rate roughly £4k, at higher rate roughly £8k in this example.
Hope that helps.
We would live in town 3 nights a week and coast 4 nights.
You can only have one as your primary residence. Deciding which this is will probably have more to do with stamp duty, and possibly council tax depending on where the houses are, than CGT.
Don't forget you get an extra 9 months of assumed living in your old property under the principal primary residence rules. So in the exaple above you would actually only be taxed on 15 months out of the 22 years you lived there
If you've lived here full time (ie primary residence) nothing as yet.
Say the coast house becomes the primary residence as of now
To work out out CGT livability take the price you sold the town house for,, when ever that is, and minus the £250k you paid for it. That is the gain. Then aportion it.
For an example, you sell it in two years time for £550k.
So you've made a gain of £300k over, by then, 22 years, but it was your primary residence for 20 of those 22 years (ie 2006 to now) So only 2/22 of that £300k is taxable, which is £27,272.
From that £27k deduct your CGT allowance (and maybe Mrs Zippy's too depending on ownership, marital status etc) £3k each unless special circumstances. So £21k is taxable. Pay tax on that £21k at whatever rate applies, depending on if you're a basic or higher rate taxpayer etc. At basic rate roughly £4k, at higher rate roughly £8k in this example.
Hope that helps.
We would live in town 3 nights a week and coast 4 nights.
You can only have one as your primary residence. Deciding which this is will probably have more to do with stamp duty, and possibly council tax depending on where the houses are, than CGT.
The issue is that the value of the house now isn't 'registered' in any way and house prices have stopped increasing vary much at all. You'd have no CGT to pay on your current home if you sold it now. However, if the price didn't go up at all for another 10 years and you sold it then you'd be liable for 10/30 of the 300k - so would pay CGT on 100k (less whatever the CGT allowance is at the time).
You live in one property, your missus in the other? ....well, on paper at least.
A married couple can only have one primary residence for the purposes of CGT.
By some weird anomaly my wife & her ex were made tennants in common but with him having zero % share* of their house at divorce, but when they came to sell up after a time of neither of them living there, the assessed CGT was shared equally between them both & thus moved the liability to under the threshold.
* I think to keep him on the hook for the mortgage.
A married couple can only have one primary residence for the purposes of CGT.
Aha.... There must be another reason that they're officially in different houses. Council tax dodge? Something to do with a second home, anyways.
Your CGT allowance could have been used up elsewhere, so that is not necessarily a given, e.g. if you sell non ISA investments to pay for the new house
Aha.... There must be another reason that they're officially in different houses. Council tax dodge? Something to do with a second home, anyways.
Second home uplifted council tax dodge no doubt, probably still complaining about lack of local services too 🤔
Aha.... There must be another reason that they're officially in different houses. Council tax dodge? Something to do with a second home, anyways.
Second home uplifted council tax dodge no doubt, probably still complaining about lack of local services too 🤔
maybe. Does that even work?
Just to say I've met a few couples in recent years who have separate homes because they get on really well but just still like their own space.
I know someone who separated but never divorced, spent some years apart and are now a couple again but have no intention of sharing a home full time. It has only just occurred to me the CGT/primary residence tax implications of that as one of them is moving...
(it has always struck me as a very odd that for all the years that house prices have been increasing significantly there has been a major tax disadvantage of being married. Stay single and keep separate homes and you can can have two primary residences (though the guidance is "provided you genuinely live in both properties and split your time naturally." which would mean you'd not be able to rent out the second property and would have to actually use it a god amount). The big benefit of marriage is inheritance but you could have two houses next door to each other potentially and then sell one of them when you got old, move in together and then marry.
(I also know someone whose parents divorced, got back together, remarried, realised they'd made a terrible mistake and divorced again. But they stayed on good terms and my friend found they'd married a THIRD time so that she inherited from him)
