Buying a new house before selling my old home what will be the tax implications?

If you are buying a new home and you already own it, you need to think about what you will do with your home. (in that case it will be your primary residence for both of you) and if you are buying one you should consider tax wisely. Want to keep your old home? Hire it? Or sell it ?. Time for everything is very important here. And there is no definite answer to what will save your tax costs. It all depends on your personal situation so it is best to talk to a financial professional who can give you personal advice. If you are buying a new home and are not selling an old one because you might consider renting it in the future you might consider the following taxes:


  • Capital Gain Tax
  • Stamp Duty Land Tax
  • Income Tax


Capital Gain Tax:


You will have to  pay capital gains tax when you sell a property that is not your main home, used for any commercial purpose and you allow it.

So if you buy a new house before selling the old one you will face CGT in any profits you will make.

While you may not be able to get the full benefit of the private accommodation you get when you sell your main home, you will get relief in the last 9 months of living in that area.

Higher or higher taxpayers will pay 28% of the profit. If you fall within the basic tax band after deducting your personal income of £ 12 570 and a free tax grant of £ 12 300 you will be paying 18% on accommodation.


Stamp Duty Land:


You will need to pay a Stamp Duty Land Tax if you buy more than £ 125 000.

First-time buyers also  find relief on SDLT  in the SDLT but since in this case you are not the first buyer you will not get that rest.

This tax needs to be paid within 14 days of completion, the lawyer will usually do this for you but, if he or she does not do so you will need to complete a refund and pay the tax. Failure to do so within 14 days of expiration may result in a fine.


Income Tax


If you get rent in your area and make a profit you will be paying income tax on it. To calculate your taxable income you will deduct all the allowable expenses from your rental income, deduct your personal income if it is not used against your salary from other sources and do not forget to deduct the local grant. The property grant is the money you will get from the money you get from your property. It is currently £ 1000.

You will report and pay your rental income in the self-assessment tax return which will be completed and submitted online by 31 Jan of the following year.

Once you have calculated your income tax return, if you have sold your property on 6 April 2020 or later you must report and pay tax to HMRC within 30 days.

If you want to rent your property for sale or sell your property and are concerned about the impact of the tax you should go to a professional consultant. We at Taxaccolega can provide you with tax advice on matters of your property. Call us on 020 8127 0728 or send us a message here and our special property calculators in Croydon, London will be happy to assist you.

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