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Where Taxpayers and Advisers Meet

CGT / Stamp Duty Separation- moving in to an owned 2nd home

paulus1
Posts:4
Joined:Tue Nov 30, 2021 9:30 am
CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby paulus1 » Tue Nov 30, 2021 9:47 am

A married couple living in and co-owning a property (mortgage 90% paid off) decide to part. They have owned a 2nd property (part-mortgage) for a couple of years which has been rented out.

They decide to separate and the husband will move into that property when it becomes available at end of lease so it would effectively then become his main residence. Up until that point income tax has been paid on rental income per rules, stamp duty was paid at the higher 2nd home rate on purchase.

With settlement the wife will take on the current primary residence alone and the husband will take on the 2nd home alone.

I have a few questions:

Would there be a CGT bill on the increase in value of the 2nd home for either party when the husband moves in or at a future date ?

Would there be any kind of refund possible on the stamp duty paid at (what was) 2nd home rate?

Any other tax implications that spring to mind ? - This is a hypothetical situation, I'd also be interested to know if there would be any difference if the 2nd home was originally purchased (with part mortgage) solely by the husband (as opposed to joint). I'm aware that there is 2xCGT relief if purchased by both..

Thanks in advance...

pawncob
Posts:4878
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby pawncob » Wed Dec 01, 2021 10:18 am

1. No CGT until it's sold.
2. Unlikely.
3.You can't change history. CGT is a matter of fact.
With a pinch of salt take what I say, but don't exceed your RDA

paulus1
Posts:4
Joined:Tue Nov 30, 2021 9:30 am

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby paulus1 » Wed Dec 01, 2021 10:25 am

Thanks, on your point 2 I've read that a refund on the higher amount is possible if transfer to main residence within 3 years..

pawncob
Posts:4878
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby pawncob » Wed Dec 01, 2021 1:44 pm

If you sell or give away your previous main home within 3 years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.

You cannot get a refund if:

you or your spouse still own any part of your previous home
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#reliefs-you-may-qualify-for
With a pinch of salt take what I say, but don't exceed your RDA

paulus1
Posts:4
Joined:Tue Nov 30, 2021 9:30 am

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby paulus1 » Wed Dec 01, 2021 2:51 pm

Thanks again although I had a (quick) look through these:
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#reliefs-you-may-qualify-for

and couldn't see anything that mapped to relief not applying if _either_ the husband or wife still owning any part of the original home. Just to clarify (and in this example) the husband would no longer be on the deeds/own any part of original home post settlement.

bd6759
Posts:3745
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby bd6759 » Thu Dec 02, 2021 12:02 am

On the date of acquisition it was not intended that the purchased property would be the purchasers only or main residence. That is a requirement for relief.

paulus1
Posts:4
Joined:Tue Nov 30, 2021 9:30 am

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby paulus1 » Thu Dec 02, 2021 5:27 pm

Thanks for clarifying - if the property is sold at a future date do CGT rules apply for the period that the property was rented out/prior to becoming sole residence and if so how would the value be known at that (historical) point in time.

pawncob
Posts:4878
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT / Stamp Duty Separation- moving in to an owned 2nd home

Postby pawncob » Thu Dec 02, 2021 5:50 pm

PPR/renting CGT is calculated on a time apportioned basis, so the time when it was let would be chargeable. Depending on how long before it's sold, the gain may be under the annual limit.
With a pinch of salt take what I say, but don't exceed your RDA


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