partner transferring her half of PPR to me - CGT ?

[zorba]

In Dec '04 my partner and I jointly purchased a house for £145k.

In April '06 we moved into a new house together.

Rather than sell the old house (now worth £170k) I'd prefer to rent it out as it will probably continue to appreciate in value. However my partner has no interest in this, and she would be happy to transfer her half to me.

However I am concerned that we might lose PPR relief on half the house, the half that she transfers to me, as I have only lived in "half" the house.

Is this a valid concern ?
Where can I find an IR guide on this sort of thing etc.
Many thanks

[CDavey9501@aol.com]

Which half did you live in and were ye not getting on during that time?


Seriously, if the house was your PPR then you will get PPR relief and probably letting relief as well. If you sell after 3 years of moving out then there may be some CGT to pay some where down the line. If I understood your question correctly!

[zorba]

Haha, who said couples were meant to get on anyhow

Seriously, the house was our PPR, mine too.

Lets simplify my example.

Bought house together for 140k, moved in, lived for 2 years.
Then both moved out, she transfers her half to me.
After which I rent the house out for a further 3 years, before selling for 240k.

Total gain = 100k, over a total time of 5yrs
Gain due to joint ownership = 2/5 * 100k = 40k
Gain due to my ownership = 3/5 * 100k = 60k

My gain = 20k + 60k

Will half of the 60k be treated as not liable to PPR, because I didn't live in that "half" ?

[CDavey9501@aol.com]

No my understanding is that if you sell within 3 years of moving out then all the gain is exempt from CGT. Even after 3 years and with letting relief it is likely to be some time before any CGT to pay. Generous isn't it?

[King_Maker]

Have you read the Inland Revenue's Help Sheet IR283 which deals with CGT for private residences?

It is downloadable from their website.

http://www.hmrc.gov.uk/leaflets/menu.htm


[CAVEAT : see Matthew Hutton's article of August 2005 where Lettings Relief falls within last 3 years of ownership :

http://www.taxationweb.co.uk/articles/a ... php?id=215

[zorba]

Hi King_Maker,

Thanks for your response.

I have already read this helpsheet and article (having seen your similar posting many times on other issues) and scoured the internet looking for examples of joint ownership and changing ownership of portions of properties, to no avail

[King_Maker]

As you are not a married couple, you will need a valuation done when she transferred her 50% to you.

The gain for each of your (two) 50% shares needs to be calculated separately. But only if the disposal occurs after 3 years from moving out.

Otherwise it is exempt from CGT - her transfer to you has no CGT impact.

[CDavey9501@aol.com]

King,

I thought there would only be one gain if the disposal occurs after 3 years. But the acquistion costs would be 50% original cost and 50% market value at date of gift?

[King_Maker]

"I thought there would only be one gain if the disposal occurs after 3 years. But the acquistion costs would be 50% original cost and 50% market value at date of gift?" - CDavey

I agree.

Is that not what I posted?

[CDavey9501@aol.com]

Not really!