I'm thinking about down-sizing from my present home which has trebled in price in the last 10 years - clear the mortgage and buy a smaller house (but with a larger garage )
If I do this will I be liable to 40% capital gains tax even though it is my only home?

no

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Originally posted by RazMan

If I do this will I be liable to 40% capital gains tax even though it is my only home?

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Oooohh I feel a winter project coming on! Thanks guys

You only pay CGT on investments - as long it's your registered home you don't pay (I know someone who moves on a regular basis to keep making money from property development and avoiding CGT)

Now there's an idea! I could move every year or two, cash in on the profit from the sale and finance yet another kit car project! mmmmm this year was an Aeon, next year could be an Ultima with that 5.7 litre Chevvy that I've always fancied.

To make it effective, you've got to be moving house as soon as the construction is complete. Not something for the family man - moving every 6 to 12 months and living effectively in a building site!

Having said that, the guy I know drives a TVR Tuscan and has a holiday after each house is sold (probably to relax in a non-building site before starting again!)

Im sure you could bend the law a little and actually live in a normal house in the missus' name and transfer your post and bank accounts etc around the development houses. I believe they are wising up to this one though, as obviously there are a lot of young developers making a fortune and paying no tax.

For good advice on all housing matters (or indeed anything money wise), visit http://singingpig.co.uk

more specifically :

http://www.singingpig.co.uk/forums/?GroupID=10

[Edited on 3/9/06 by JoelP]

Exactly what I do!!