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Where Taxpayers and Advisers Meet

2nd Home CGT

LynneB
Posts: 10
Joined: Mon Jul 25, 2016 4:50 pm

2nd Home CGT

Postby LynneB » Thu Nov 19, 2020 11:19 am

I understand that on buying a second home there is 9 months allowed to sell the original after which CGT has to be made on any gain on the first home. But what if the second purchase is a second home for occasional use?
For personal reasons I intend to live between the two for year or two and sell the original home within 3 years which I believe is necessary to reclaim the 3% extra stamp duty. If so will the 9 months rule not apply and my original home therefore be CGT exempt? Would I then have any liability for the 2nd home as once I sell the original home it will then be my only home?
Thank you to anyone who has any experience to offer.

SDLT Geek
Posts: 213
Joined: Sun Apr 30, 2017 5:45 pm

Re: 2nd Home CGT

Postby SDLT Geek » Thu Nov 19, 2020 10:41 pm

You have asked about capital gains tax, but I am going to comment on the stamp duty land tax point you mention.

You explained that you are buying the second property for occasional use, not as your main residence. If that is the case, then you are not entitled to recover the extra 3% paid on that purchase when you come to sell the first property. One of the conditions of being able to recover is that at the time of the purchase of the new property, you intend to live in it as your only or main residence.

LynneB
Posts: 10
Joined: Mon Jul 25, 2016 4:50 pm

Re: 2nd Home CGT

Postby LynneB » Fri Nov 20, 2020 9:49 am

Thank you so much. I did not realise this and it may make ll the difference in my planning

LynneB
Posts: 10
Joined: Mon Jul 25, 2016 4:50 pm

Re: 2nd Home CGT

Postby LynneB » Fri Nov 20, 2020 10:32 am

SDLT Geek, your helpful answer has raised a further question. My intention is totally to have the second home as my main and permanent home, only that it may take a year or two to make the transition. When I do move into the 2nd home full time will I still be ineligible to reclaim the 3%?

SDLT Geek
Posts: 213
Joined: Sun Apr 30, 2017 5:45 pm

Re: 2nd Home CGT

Postby SDLT Geek » Fri Nov 20, 2020 10:07 pm

Any right to recover the 3% extra SDLT paid on the second property would be triggered by the sale of the first property (not by later moving into the second property).

One of the conditions for the right to recover is that at the time of the purchase of the second property the buyer intends to live in it as their only or main residence. HMRC accept that the buyer does not have to move in immediately to meet this test. They say it would be no objection if works are to be done before the buyer moves in.


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