When you sell your main home, any gain you make is generally tax free (if you lived there for the entire period that you owned it). If you can’t sell your old home before you move into your new one, you may hold two properties for a time. To prevent you being taxed on gains arising in this overlap period, the gain attributed to the last 36 months of ownership of your old home is free of capital gains tax (CGT). This 36 month tax free period is to be cut to 18 months where contracts for sale of the property are exchanged on or after 6 April 2014.
If you are thinking of selling a property which was your main home for a period, you may need to advance that deal in order to maximise the tax free gain on the disposal.
Where two or more properties are occupied concurrently as a home, the taxpayer should ‘elect’ which property is to be treated as the main residence in order to mitigate any potential capital gains tax charge in the future.
If you would like to discuss principal private residence further, you can call Loveth on 01733 305163 or email her at Loveth@greenstones.co.uk