CGT pitfalls if Declaration of Trust?

[tomtx]

My husband lived in his flat prior to letting it out and then meeting me. Now that we are married, we are considering a Declaration of Trust (DoT)to split the rental income 50/50. I think I've read somewhere that doing so could increase the CGT we would owe upon sale of the flat.

Is it true that transferring 50% of the property to me years after he moved out reduces the Principle Primary Residence (PPR) relief he would normally have been able to receive? If so, how is this calculated? I'm assuming this would be balanced by both us exercising our individual CGT standard deduction.

Thanks!

[maths]

The CGT effect of husband transferring say 50% of property to wife at a time when property was not occupied by you both is that the gain attributable on sale to your 50% would not be capable of reduction due to private residence relief or lettings relief; had husband retained 100% of flat then on sale he would receive full private residence relief and lettings relief.

EG
Husband purchased property cost 100.
Lived in it for 10 years and then let out for 5 years.
Transfer 50% to wife; for cat cost to wife 50 (Ir 50% of 100).
Sale 520.


H gain =[ 260 - 50] - [[10/15] x 210] - [[5/15] x 210]* = 210 - 140 - 40* = 30. (*lettings relief capped at 40).

W gain = [260 - 50] = 210


If H had not made transfer his gain would have been :
[520 - 100] - [10/15 x 420] - [5/15 x 420] = 420 - 280 - 40* = 100.

(for ease of explanation have ignored last 18 months of o'ship and annual exemption).