Transfer property share back to spouse?

[mhobbs]

Hi,

Any comments / advice on the following appreciated:

- Man buys property A, lives in it alone for a number of years.
- Man marries and moves out of property A, moves in to wife's home.
- Property A is then let out.
- A few years later, property A is transferred into joint names with wife (as joint tenants). The couple are not living at property A at the time of transfer, so wife does not acquire any of husband's PRR history
- A few years later, the couple are selling property A. The wife has no PRR, so no letting relief either. Faced with CGT liability:
Can she give her interest in property A back to her husband, shortly before selling the property?
Can this be done without affecting legal ownership and having to submit a TR1? Eg by a deed of trust?
Is there any risk of this interfering with any of the husband's relief (ie his PRR)?

Thanks for your help

[RMC]

The wife DOES acquire husband's PRR history and her CG should be calculated in the same way as husband’s, no need to transfer the ex-private residence to him. See TCGA s.222(7).

[mullet]

The wife DOES acquire husband's PRR history and her CG should be calculated in the same way as husband’s, no need to transfer the ex-private residence to him. See TCGA s.222(7).

I disagree. You have to work through Section 222(7) in stages.

First part of 222(7) - if different interests in an asset have been acquired at different times, then in simple terms the earliest relevant acquisition date is used. Then it goes into (a) and (b) for a husband/wife living together:

222(7)(a) - talks about inter-spouse transfers of an only or main residence. It is written in the present tense "which is their only or main residence" (my emphasis), not which was or which has been ... And this paragraph is particularly concerned with a transfer on death.

222(7)(b) - effectively matches periods of residence where they are not the same. But (b) only applies if (a) applies - i.e. that it was an only or main residence for both at the time of transfer. And this means true "residence", not staying there temporarily for a month just to gain a tax advantage. And remember that (a) appears to have been written with death in mind (but it does not apply exclusively to such cases).

So in this case Section 222(7) does not transfer the ownership history from husband to wife, since the property was not as a matter of fact the wife's only or main residence at the time of transfer.

[RMC]

To start with, TCGA1992 s.222 begins with (I quote):-
“This section applies to a gain accruing to an individual so far as attributable to the disposal of, or of an interest in a dwelling-house or part of a dwelling-house which is, or has AT ANY TIME IN HIS PERIOD OF OWNERSHIP been, his only or main residence.”
Further, ss(7) specifically includes disposals by a legatee.
Are any deceased spouses still resident in your private residences by any chance?

[mullet]

“This section applies to a gain accruing to an individual so far as attributable to the disposal of, or of an interest in a dwelling-house or part of a dwelling-house which is, or has AT ANY TIME IN HIS PERIOD OF OWNERSHIP been, his only or main residence.”

I cannot tell whether or not you are arguing against me.

Yes, S222 says the above - to give the section context. But that doesn't mean that every part of S222 applies to every person in every instance.