Kevin Mc

Am I liable for Capital Gains Tax if I sell my house for a cheaper one?

eg. Sell house1 for £100,000
buy house2 for £50,000

Assuming that the £50k is all equity, does this count as capital gains?

Dunk

iTrader: (1)

Warning sweeping statement follows - if it's your main residence - no.

P20SPD

iTrader: (1)

Its not what you reinvest in house 2 that counts.

Capital gains comes about from the "profit" you made on house 1.

If it is your Principle Private Residence (your main home where you live), then no.

MarkO

Bear in mind that if you let a property in which you've lived for over 2 years, buy another property as your principal residence, and then sell the original property 2-3 years after you began letting it, then you can usually avoid CGT.

The moral being, before you do a buy-to-let, live in the place for a couple of years first.

Kevin Mc

Thank god for that! We're thinking about flogging the house to use some of the equity to put the kids through private schools, as the state school seems not to care about the education of my eldest (6 years). Bet we don't get any tax incentives to go private either - i.e. I'll still be paying for tax towards state schools without getting any benefit.

CrisPDuk

Mark, I'm not sure, but I think the time period for residence is quite a bit less than that.

MarkO

I'm only going by what my accountant told me, 'cos we were going to let out our house when moving to Scotland, so I asked him exactly this question.