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Where Taxpayers and Advisers Meet

Selling my second home

Matt3-
Posts:1
Joined:Tue Jan 15, 2019 5:43 pm
Selling my second home

Postby Matt3- » Tue Jan 15, 2019 6:05 pm

Dear Taxation web

I've looked on the .gov website regarding property tax and capital gains tax but would like your thoughts on how to reduce my tax bill. A calculation would be great to confirm I have considered all possible areas.

I bought my first house in 1994 for £35000 (good old days!). I paid around £2000 costs.
I lived in the house up to 2005 and for the last 5 years rented out rooms (years 2000 to 2005).
I then moved out in 2006 to live with a partner for 6 years, renting out all the rooms in the house.
In 2013, I bought a another house to live in. I bought this house for £181,000 (£3000 costs).

Now, 2019, I want to sell my first home and main home to buy a single home to live in.

First house I'm now selling for £300000 (less £5000 costs).
Main home I'm now selling for £240000 (less £4000 costs).

How do I go about working out what tax I need to pay?

Also, does it matter in which order I sell the houses? If I sell my main house first (tax free hopefully), can I then move in to my second home for a period before selling it (tax free hopefully)?

Thanks
Matt

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Selling my second home

Postby AGoodman » Wed Jan 16, 2019 11:22 am

It sounds as though your current home has been your main home throughout your period of ownership so that will qualify for 100% PPR.

You need to work through the former. You should be able to claim lettings relief (as the law stands) for the years you rented it out but this relief is capped at £40,000. Essentially:

(1) work out the proportion of the ownership period that you were in occupation so qualifying. Multiply that proportion by the gain to calculate the relief to be deducted.
(2) work out the proportion of time you were letting - this qualifies but capped at £40k of relief.

Deduct your annual allowance.

There may be some issues over the years you were in but letting rooms out. I don't know enough about that.


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