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

Can I transfer half of a property to my wife just before disposal to reduce CGT liability

masteroats
Posts:35
Joined:Wed Aug 06, 2008 3:48 pm
Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby masteroats » Mon Jul 26, 2021 10:42 am

Hi,

Hopefully a simple question.

I have owned a property for 20 years, approximately half of which it was rented out. As such, I have a CGT liability.

If, before disposal, I transfer half of the property to my wife, can we split the whole liability? Or would I still be responsible for the large majority and my wife just able to claim against a few days at the end when she was a joint owner?

Not sure if it makes a difference but I only married my wife 5 years ago so the vast majority of the duration of property ownership, we weren’t together.

Thanks in advance for any response

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby maths » Mon Jul 26, 2021 12:17 pm

Have you ever lived in the property and if so how long?

masteroats
Posts:35
Joined:Wed Aug 06, 2008 3:48 pm

Re: Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby masteroats » Mon Jul 26, 2021 12:40 pm

I lived in the property from 2003 to 2007.

The property was rented out from 2007 to 2017

I have lived in the property with my wife since 2017 to current.

Thanks

someone
Posts:692
Joined:Mon Feb 13, 2017 10:09 am

Re: Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby someone » Tue Jul 27, 2021 11:33 am

You can transfer half to your wife and split the liability. Your wife gets the same PPR calculation as you do.

There is a chance that HMRC might decide to challenge it claiming that the only reason for the transfer was tax avoidance. Therefore it's important that you and your wife receive your shares of the proceeds separately, preferably into independent bank accounts that the other has no access to.

(Once that's been done, pooling your money again to buy something else isn't a problem, but HMRC are more likely to be able to make a case that the transfer was purely for tax avoidance if you've never lost control of half of the proceeds.)

(I am not an accountant)

masteroats
Posts:35
Joined:Wed Aug 06, 2008 3:48 pm

Re: Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby masteroats » Tue Jul 27, 2021 4:51 pm

Thanks someone. It wasn’t as simple a situation as I expected.

Thank you for your help.

Stats
Posts:12
Joined:Mon Mar 05, 2018 10:07 pm

Re: Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby Stats » Tue Jul 27, 2021 10:13 pm

It may help defeat an HMRC challenge if the property required repairs and/or decoration and your wife solely covered that cost. Thus, the transfer of ownership was not solely for tax avoidance.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Can I transfer half of a property to my wife just before disposal to reduce CGT liability

Postby maths » Tue Jul 27, 2021 11:22 pm

It's highly unlikely that hmrc would challenge.


Return to “Capital Gains Tax, CGT”