“Don’t buy a new home before selling old one” tax experts tell buyers
A group representing 600 tax experts working in UK legal and accounting firms is warning buyers not to purchase a new home without selling their old one first – unless they are prepared to risk paying thousands extra in taxes if the sale is delayed.
The UK200Group is also calling for HM Revenue and Customes to defer the need to pay Capital Gains Tax on unsold homes for those who purchased a new home and fail to sell the old home within nine months of moving out.
Currently, an individual purchases a property but cannot find a buyer for their current home they must pay the controversial three per cent ‘additional homes’ Stamp Duty Land Tax surcharge on the price.
The individual then has three years to sell their former home and reclaim the three per cent.
Additionally, there is the risk that Capital Gains Tax could be liable if the former property can’t be sold within nine months of moving out.
“With a significant possibility that the housing market will stall or slow down many people who chose to purchase a new property but without having a buyer for their old home could find themselves tens of thousands of pounds out of pocket” explains Andrew Jackson, who chairs the UK200Group’s tax panel.
“That is why we are calling on HMRC to relax the deadlines on selling the former home.
“In the meantime our advice is to think very hard about the possibility that your old home could take longer to sell than you expect.”