Capital Gains Tax with second property.

Associate
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My parents had a house signed over to them many years ago (they had bought it all but in name). There is quite a big difference in the value from when it was signed to them and what it is worth now.

They have quite a substantial mortgage on their main property at the moment. They are looking to sell the second property to help pay off their current property which they live.

From what I understand selling the second property would have Capital Gains Tax applied to it.

If instead they sold their main property that they have lived in for 3+ years and moved into the second property. Would they be exempt from paying CGT on their main property?
 
Associate
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As far as I know if they sell their main property they are not likely to pay capital gains tax on it due to 'private residence relief'.

See this government link www.gov.uk/tax-sell-home .

The full detail of the rules for tax efficiency when you have two homes is a bit more complicated and I'd suggest professional advice for that. However that doesn't change that your current main home if always lived in since owned will likely have no capital gains tax to pay.
 
Soldato
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Lucky escape for principal home.

Yeah the whole system is a nightmare now. I would like to rent my home to my brother and his family for way below market rate to, you know, be a decent human being and help people out while I buy another place to move to another area but it's completely unrealistic.

It'd mean finding at least 12k stamp duty for a second home and tax on rental income would mean I'd barely cover mortgage plus a bit to cover maintenance. Then there's CGT if he wants to leave and I need to sell up.

It's fine if you're a company or rich cash buyer though. Nice one George Osborne. I can't write the four letter word for you without a ban.
 
Soldato
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Can you not become a company?

How does a person become a company?

Lucky escape for principal home.

Yeah the whole system is a nightmare now. I would like to rent my home to my brother and his family for way below market rate to, you know, be a decent human being and help people out while I buy another place to move to another area but it's completely unrealistic.

It'd mean finding at least 12k stamp duty for a second home and tax on rental income would mean I'd barely cover mortgage plus a bit to cover maintenance. Then there's CGT if he wants to leave and I need to sell up.

It's fine if you're a company or rich cash buyer though. Nice one George Osborne. I can't write the four letter word for you without a ban.

Give them the money to buy the house then. No second home stamp duty or additional income tax.

No government is going to set up tax relief for letting to family. Would open up a whole can of worms and tax avoidance schemes.
 
Soldato
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Can you not become a company?
You're missing the point. Yes, I can form a company but I cannot transfer a property to a company. It counts as a sale so the company has to pay stamp duty plus from my limited research I may also be liable for tax myself.

The new rules are formulated to make second property ownership as unappealing as possible in any form to the average Joe. I can understand discouraging people from pricing first time buyers out of the market but this is overkill IMO.
 
Soldato
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How does a person become a company?



Give them the money to buy the house then. No second home stamp duty or additional income tax.

No government is going to set up tax relief for letting to family. Would open up a whole can of worms and tax avoidance schemes.

Give them the money what? I can't move into a cardboard box. :p
 
Soldato
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How is it overkill. Seems to be doing exactly what was planned.
You mean allowing large companies and people with loads of cash to dominate the property market?

I'd have been more in favour of an exponential tax on additional properties.
 
Soldato
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If you aren't buying a second home then what is the problem? Buy the property and let your brother's family live in it.
You didn't read my post... I own my current home. I want to move, he needs a family home. He is not in a position to get a mortgage.
 
Soldato
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You mean allowing large companies and people with loads of cash to dominate the property market?

I'd have been more in favour of an exponential tax on additional properties.

Companies pay different taxes to people. Aren't going to suddenly change taxes for corporations to try and affect a single industry.

You didn't read my post... I own my current home. I want to move, he needs a family home.

You go ahead and move and give money to your brother to get a mortgage. Why so attached to the current property?
 
Soldato
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Companies pay different taxes to people. Aren't going to suddenly change taxes for corporations to try and affect a single industry.



You go ahead and move and give money to your brother to get a mortgage. Why so attached to the current property?
Because his kids could still go to the same schools, the house is ideal for his circumstances and basically down the road from where he is now.

Actually I'm not sure why I'm explaining this...
 
Caporegime
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The new rules are formulated to make second property ownership as unappealing as possible in any form to the average Joe. I can understand discouraging people from pricing first time buyers out of the market but this is overkill IMO.

I don't see why it is overkill, it seems like it is doing quite a good job of discouraging you from becoming a second home owner!
 
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