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Where Taxpayers and Advisers Meet

Transferring equity to spouse prior to sale (main home)

gmtfd
Posts:6
Joined:Tue Nov 26, 2013 2:03 pm
Transferring equity to spouse prior to sale (main home)

Postby gmtfd » Wed Aug 30, 2023 9:09 am

Hi all

My wife is Italian and we are in the process of moving our family to Italy. We jointly own a house in the UK which is mortgage-free. Last summer my wife and our daughter moved into a property in Italy which she co-owns with her brother (she also owns another property there outright). I continued living in our house in the UK. We are now ready to sell the house. Once this has been done I will join my wife and daughter in Italy.

My wife's Italian accountant has advised her to transfer her equity in the house to me before it is sold. My understanding is that because we are married and there is no mortgage, it should be possible for her to do this without incurring Capital Gains Tax or Stamp Duty Land Tax. Then, when the house is sold, because I have always lived in it as my main home, again CGT should not be payable.

I'd be really grateful for people's views on this - have I misunderstood or missed something important?

Regards

Gareth

someone
Posts:688
Joined:Mon Feb 13, 2017 10:09 am

Re: Transferring equity to spouse prior to sale (main home)

Postby someone » Wed Aug 30, 2023 9:37 am

Last summer my wife and our daughter moved into a property in Italy
I don't think the transfer matters from a UK tax perspective. A married couple can only have one main residence therefore either the house is the main residence for both of you, or it is not the main residence for either of you.
which she co-owns with her brother (she also owns another property there outright)
Was this property always a residence for you and your wife? If not then you can make a (joint) CGT election in favour of the home you're selling (and exclude the final 9 months if it helps as you get that anyway as PPR). If it was a residence and you didn't already make an election then you're probably out of time to make an election now and your main residence will be decided on the facts - which I'd guess as the home you are selling up to the point your wife moved to Italy and then the Italian property from that point (based on the assumption that where your wife and daughter live is where the family lives and you're temporarily living "away from home")

There's also Italian tax to consider. The transfer might matter for Italian tax purposes even if it's irrelevant for UK CGT purposes. You don't say why the Italian accountant suggested doing this. You are correct that if there's no mortgage then the transfer can be done free of UK CGT and SDLT but you're not necessarily correct that just because you've always lived there you will get full PRR at sale (see above)

gmtfd
Posts:6
Joined:Tue Nov 26, 2013 2:03 pm

Re: Transferring equity to spouse prior to sale (main home)

Postby gmtfd » Tue Sep 12, 2023 6:33 pm

Many thanks for this really helpful reply. I'm sorry for taking so long to reply myself. It looks like we will be nominating our house in the UK as our main home, as the place in Italy which my wife co-owns has only been a residence since last summer.

Cheers

Gareth


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