CGT and PRR - Implications of Transfer Between Spouses

[Keith317]

Hi,

I wonder if someone could shed some light upon this.

I bought a property in October 1996 and lived in it as my principal private residence. My wife moved in with me in November 2004 and we lived in the property together until September 2012.

At that point, we moved to another property and let the existing property. At that point I put the property in my wife's name.

Now, we are intending to sell this property which is still held in my wife's name. Can my wife claim PRR from October 1996 or just from September 2012?

Many thanks

Keith

[Peter D]

No, I'm afraid not. She did not live in the property as an owner so no PPR or Letting Relief.
She will inherit your acquisition price from 1996 so this could be quite a large CGT bill.
When exactly did you put the property in her name, before you moved out or after. When did the first rental state.
Regards Peter

[Keith317]

It would have been after we moved out.

What would be the case if we were to transfer the property back to my name now?

[Peter D]

It would start a 'new' period of ownership that you will not have lived in the property so it will not help. Sorry about that. Regards Peter

[Keith317]

Thanks Peter - much appreciated.

What if the property is transferred into my name AND we live in the property for some period? Would that work and what would the duration need to be?

[Keith317]

Actually, part of the information I gave above is factually incorrect.

The poroperty was in fact transferred to my wife in August 2012. We then moved out and let the proerty from September 2012. There was, therefore, a period where we lived in the house under her ownership although it was only for one month.I am not sure that the one month really helps a great deal with PRR and the house is in West London so the 40,000 letting relief won't go far either.

[Peter D]

Problem solved then. I doubt there would be any CGT liability. Please provide the dates and figures and I'll run the numbers for you. Regards Peter

[Keith317]

Thanks Peter, that's encouraging news.

Dates are as follows :

Purchase of first property October 1996 (exact date unclear) at 150k
Purchase of 2nd Property March 2011
Transfer to my wife : 21 August 2012
Final Move to new property 8 September 2012
Potentail sale proceeds of old property c. 1 million

Thanks again.

Keith

[Peter D]

I have assumed your wife is a lower rate tax payer :
Purchase 150,000 14/10/1996
Disposal 1,000,000 14/12/2015
Total Gain 850,000
PRR 772,052 208 229
Capital Gain 77,948
Lett Relief 40,000 Qual Days 644
Net Gain 37,948
CG Allow 11,100
CGT 4,833 0
CGT 0 0

CGT Bill 4,833

or £7,517 if she is a higher rate tax payer.

Regards Peter

[Peter D]

The reason for the CGT is due to the fact you topped out of Letting Relief which is restricted to £40,000. However with exacted dates for PPR ( in whole days ) and Letting period in whole days and the legal costs of acquisition including SDLT and sales and legal fees of disposal the gain may be wiped out. Regards Peter