Newsletter Autumn 2020

CGT on two homes

Moving home is particularly stressful in the middle of a pandemic, as key steps get delayed and deals may fall through.

The gain you make on the sale of your home is only free of Capital Gains Tax (CGT) for the period that you actually occupy that property as your main home, plus the last nine months, where you move out before a sale is agreed. This final tax-exempt period is 36 months if one or more of the owners has moved into residential care or is disabled.

Where you move into your new home before the old one is sold, that could leave a capital gain on your old home exposed to CGT, if the delay in selling your old home exceeds nine months.

If you have already exchanged contracts to acquire your new home, the gain arising on that new property could be exposed to CGT if the delay to taking up residence is extensive. However, the law allows you up to two years’ worth of tax-free gain on your new property, where you haven’t moved in because there was a delay in selling your old home.

Where your family are concurrently occupying both homes, say the children are at the new residence in order to start new schools, don’t forget to tell HMRC which property is considered to be your main home. A married couple can only have one main home between them at one time for CGT purposes.