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Capital Gains Tax
We are about to start building our new house in the garden of our existing house. We will move into the new house when it is completed and sell the old house. Will there be any CGT to pay?
3 answers
No, because each in turn will be your "principal private residence". As long as you sell your old house within 3 years of moving into your new house you will not have to pay.
Don't forget that you can claim all your VAT back on the new build too.
Rose
Thanks Rose, I thought that was the case. After going through several departments at the tax office and not getting a straight answer the only suggestion they had was for me to declare it on my tax return and if there was any tax to pay they would be in touch.
The self-assessment tax return only asks you to declare transactions on which you believe you have a CGT liability. As the property being sold will be your Principal Private Residence, there is no liability, so you do not need to enter anything to do with this. Only if you decide to sell the new house you have built in the garden and stay in your old home do you need to start thinking carefully about tax planning strategies.