This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

PPR and Lettings Relief - do either of me or my spouse qualify?

JetPil0t
Posts: 9
Joined: Sat Jul 11, 2015 12:19 pm
Location: England

PPR and Lettings Relief - do either of me or my spouse qualify?

Postby JetPil0t » Sun Feb 10, 2019 4:45 pm

Hello again everyone, again another question from me which is similar to other questions that have been asked but I cannot find anything recent that matches my circumstances, so please bear with me.

Background:
- I bought a property in 2012. My partner and I lived in it for 3.5 years. During that time we became married (in 2014, so after just less than 2 years occupying the property). I still owned the property exclusively at this point.
- After living in the property for 3.5 years, we remortgaged it (as part of a "let to buy" remortgage) and used the equity released to buy another property (our new main residence)
- Possibly rather foolishly (depending on answers to my questions) I decided as part of the remortgage to put the property into JOINT names (my wife's and mine), which was done via a transfer of equity. The property has henceforth been owned Tenants in Common.
- The completion of the remortgage and completion of the purchase of our new property were done simultaneously, as was the transfer of equity from myself to my wife
- The completion date of the remortgage of the property was about 12 days before my wife and I physically moved out of it and into the new property that we had bought
- The remortgaged property lay vacant for about 2 months before it was let out for the first time and it has been let out (more or less) constantly ever since

We are currently looking into selling this property but I wanted to get some idea of what CGT reliefs, if any, would be available to either myself or my wife.
For the sake of the example, let's say once the mortgage and legal costs have been dealt with, the "profit" would be £100k
Let's also assume we sell the property before the new rules come into effect in April 2020.

Questions:
1. It would seem that mortgage early repayment charges are not an allowable deduction so presumably these are deducted from the "profit" by the lender before they advance the sale proceeds, but still have to be included for HMRC's "chargeable gain" figure?
2. Will my wife qualify for PPR Relief, bearing in mind 12 days elapsed between her name first appearing on the title (whilst she was still living there) and her no longer living there. Or is it the case that the remortgage on a "let to buy" basis is a clear intent that the property would no longer be her main residence?
3. If the answer to Q2 is that my wife does NOT qualify for PPR Relief, would it be possible for my wife to transfer her share of the property back to me to improve the situation (and would there be any tax to pay?)
4. Will my wife qualify for Lettings Relief, again bearing in mind 12 days elapsed between her name first appearing on the title (whilst she was still living there) and her no longer living there?
5. I think I qualify for PPR reief and Lettings relief but presumably only on some kind of pro-rata basis, since if we sell this property, I only own 50% of it in the eyes of HMRC. Is it as simple as I can claim PPR Relief and Lettings Relief against 50% of the chargeable gain or is there a more subtle way of working it out?

Any pointers to relevant HMRC examples would be very much appreciated!

pawncob
Posts: 4320
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: PPR and Lettings Relief - do either of me or my spouse qualify?

Postby pawncob » Thu Feb 14, 2019 6:00 pm

1. Nothing to do with the mortgage has any relevance for CGT.
2. Your wife will inherit your property "history" which will be shared between you.
3.-
4.Yes
5.You both qualify.
With a pinch of salt take what I say, but don't exceed your RDA

JetPil0t
Posts: 9
Joined: Sat Jul 11, 2015 12:19 pm
Location: England

Re: PPR and Lettings Relief - do either of me or my spouse qualify?

Postby JetPil0t » Fri Feb 15, 2019 12:15 pm

Thank you for the reply pawncob.

I was concerned that changing the property into joint names (with the intent that it would be let) would disqualify us (or at least my wife) from PPR Relief. Is it the fact that we lived together in the property (owned in joint names) for 12 days before moving out that has proved decisive here or is there some other rule that has enabled her to qualify for PPR Relief?

pawncob
Posts: 4320
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: PPR and Lettings Relief - do either of me or my spouse qualify?

Postby pawncob » Fri Feb 15, 2019 1:20 pm

See 2 above.
With a pinch of salt take what I say, but don't exceed your RDA

JetPil0t
Posts: 9
Joined: Sat Jul 11, 2015 12:19 pm
Location: England

Re: PPR and Lettings Relief - do either of me or my spouse qualify?

Postby JetPil0t » Thu Mar 07, 2019 11:29 am

Hi pawncob,

Thanks for the reply. Please check your PM's.


Return to “Capital Gains Tax, CGT”