We are a retired married couple and have lived in our present home for 38 years. We bought a second home in November 2002 to retire there but we never did fully live there. We paid £185,000, and it is now worth around £400,000. We have been thinking of moving to our second home but if we didn’t like living there, moving back to our old home. We have been told if we lived in our second home for nine months and changed everything to that address, we would be capital gains tax free. Could you advise us if this is the best way?   

Arthur Weller replies:  

Unfortunately, you have been wrongly advised. If you move now to your second home for nine months and make it your main residence, then sell it, you will only get proportional relief from capital gains tax. Let's say you sell it in May 2023 for £400,000, having owned it for 20.5 years. Your capital gain of (£400,000 - £185,000) = £215,000 equates to a gain of £10,488 per year, which equates to £7,866 for nine months. So, your chargeable gain will be £215,000 less £7,866 principal private residence relief = £207,134.