Buy house before selling existing house

TimAddick

In October we sold our holiday home which has left us well cashed up. My wife has a mobility issue and our current abode is awkward to use as the gardens are not flat.
The wife is keen to buy now before selling current house. We will not be able to put current house on market for about 3 months.
The houses we have looked at would take all that we got from holiday home and most of our current savings.
I have a concern that this is not financially prudent and would prefer to start looking when our house hits the market. 
Anyone got any thoughts?

The holiday house was on a level block and we have spent more time there during last few years. 

thai malaysia addick

I guess it’s a question of what risk there is and what risk you can afford to take. If your current house is on an estate, for example, where the houses sell for a semi-standard price at a predictable speed the risk is low. If your current house is one of a kind in a rural area where valuing the house is more volatile, it may take time to find a buyer who wants that house as its valuation. Also, of course, it depends on how desperate you would be to sell if you use up all your reserves. Have you still got enough/an income to
live on ok? If buyers pick up on your desperation to sell, buyers drop out at the last minute or the market falls, can you weather this in both the short and long term? Only you can judge this.

PeanutsMolloy

Be careful of Capital Gains Tax. From memory, you get a time window to sell your former main residence but I recommend you check it out from an expert.


This from taxaccolega.co.uk

Capital Gains Tax:

You will have to pay capital gains tax when you sell property which is not your main home, it's used for any commercial purposes and you are letting it.

So if you buy a new house before selling the old one you will face CGT in any gains that you will make.

Although you won't get a full private residence relief which you get when selling property which is your main home, you will get a relief for the last 9 months that you lived in that property."

https://www.taxaccolega.co.uk/news/blog/archive/article/2021/October/buying-a-new-house-before-selling-my-old-home-what-will-be-the-tax-implications#:~:text=Capital Gains Tax:&text=So if you buy a,you lived in that property

Pedro45

You could always apply for a small mortgage when buying? Then once you have sold your current main abode pay it off. That way, if you did struggle to sell, at least you would have sufficient funds to cover your lifestyle until the sale.

Elthamaddick

Sorry to hear of your wife's mobility issues, however you seem to be in a financial position most can only dream of.

Personally I don't think you'll go wrong with property and I'd have no issues buying before selling (my mum is currently in exactly the same boat and has purchased and is having it renovated before even putting hers on the market).

Agree with the above and maybe take a small mortgage to cover the potential year it could take to sell your current home, however the above is also good advice ie is it likely to sell pretty quickly as long as the asking price is reasonable

Good luck

bobmunro

Also bear in mind that you will have to pay the 3% stamp duty surcharge for second homes - you would have to pay that now but you will be able to apply for a refund of this as long as you sell your current primary home within 3 years.

MrOneLung

I think Tim is in Australia so not sure Capital Gains rules are the same