Capital gains tax on second home

We are buying a small second home to be near to family and will still keep our main home for a year or so, dividing our time between the two.. If we decide to permanently move to the second home area, we will sell our main home and the second to buy a more suitable property. We realise capital gains tax will be payable on the second home (subject to there being an increase in the price, some chance at the moment!), but apart from our individual capital gains allowance, would we be able to deduct the cost of any improvements made to the property - eg kitchen and bathroom upgrades? We are definitely going to have to upgrade them in order to live there ourselves. All advice appreciated.
10:02 Fri 07th Oct 2011
Best Answer

No best answer has yet been selected by 2Margaret. Once a best answer has been selected, it will be shown here.

For more on marking an answer as the "Best Answer", please visit our FAQ.

1 to 3 of 3

No you can't do that (offset improvement costs) unless you are running it as a business.
But what do can benefit from (and given the timescales with propose this looks like a real winner for you) is the knowledge that HMRC allows the final three years of ownership of a property that is not your 'principal private residence' (PPR) to be exempt from any capital gain. The way to do this therefore is to declare with HMRC that your new home is your PPR as soon as you buy it, and make damn sure you dispose of the old home within the three year period. None of this matters, of course if there was no CG on the old house during the period when it is not your PPR and outside the '3 year grace' window, and you would still get your annual CGT allowance in any event, even if there was a CGT liability.
All in all, you should feel confident in avoiding having any CGT liability.
Some stuff on PPR and Private Residence Relief here.
Question Author
Thank you so much buildersmate.
Any accountants out there?

My partner and I have owned a second home since 2001, and which has appreciated considerably in value.
It is held in joint names.
Our main residence is held in his name.
We are not married/civil partnered, but still classed as single.

We would like to move to the 2nd home in a couple of years time after seling our main home.
How long would we have to live in the 2nd home(now main residence) before being able to sell it without being liable for capital gains tax?

Might it be better for me to declare the 2nd home as my main residence now?

1 to 3 of 3

Related Questions

If Home Secretary Jaqui Smith is treating her family (Redditch) home as her second home for reasons of bleeding the system then the question I would love to know is this. When and if Mrs Smith sells...
I have been left a share of my father's flat. He died four months ago and since then my sister and her partner have been living there for a good reason (his health means he needs treatment here in the...
Owned a small second home jointly with my husband for four years. Sadly he died December 2014 and I am now selling the property. I realise I will have to pay capital gains tax on any 'profit' above a...
I have 2 houses. One I use occassionally and the second I live in. I am registered with the electoral register as living at the property which is empty. This is because I was toying with the idea of...
I already jointly own (with my wife) the house we live in. I own no other property. I'm thinking of part-owning a property (about one third value) jointly with my daughter, a house which she would...

Latest posts