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

Selling a rented property

Goose68
Posts:3
Joined:Tue Aug 16, 2022 7:31 pm
Selling a rented property

Postby Goose68 » Tue Aug 16, 2022 7:45 pm

Hi I would be grateful for any help.
My wife and I have decided to sell a property that she lived in before we met and have rented it out.
Due to new rental regulations coming in to effect from December in our area we have decided to sell. The property is in her name and is free from mortgage
she is also in the higher tax band where as I am not. We obviously would like to pay the least amount of CGT and wondered how we can go about this?.
Thanks again for any help.

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Selling a rented property

Postby Jholm » Wed Aug 17, 2022 8:35 am

You could consider a declaration of trust to transfer a % of the ownership prior to sale.

Sounds like elements of PPR available for her at least.

Goose68
Posts:3
Joined:Tue Aug 16, 2022 7:31 pm

Re: Selling a rented property

Postby Goose68 » Wed Aug 17, 2022 10:41 am

Thank you for your kind reply. If she gifted me 50% how much CGT would I be liable for?

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Selling a rented property

Postby pawncob » Wed Aug 17, 2022 11:38 am

Much more information needed regarding your "piece of string".............
With a pinch of salt take what I say, but don't exceed your RDA

Goose68
Posts:3
Joined:Tue Aug 16, 2022 7:31 pm

Re: Selling a rented property

Postby Goose68 » Wed Aug 17, 2022 1:10 pm

I'm not sure im getting you? I think what I'm asking is what percentage of CGT I would be liable for if I was gifted 50%?

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Selling a rented property

Postby Jholm » Wed Aug 17, 2022 1:18 pm

It depends. We don't know the expected sale price, initial cost to your wife, value at proposed date of 50% transfer (if applicable).

Rates so far as CGT goes would be 18%/28% but unsure how much basic rate band you would have left.

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Selling a rented property

Postby Jholm » Wed Aug 17, 2022 1:20 pm

But likely none on you, since if doing a deed, your base cost on your half would be the value at transfer. Gain would only accrue on any value increase between transfer and sale.

There is a chance HMRC could challenge it if they view the transfer as pure a tax fix but these are done quite often in practice it seems.

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Selling a rented property

Postby Jholm » Wed Aug 17, 2022 4:29 pm

Scrap the above. Had a moment and not with it today.

You would acquire her original base cost, not value at transfer.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Selling a rented property

Postby bd6759 » Wed Aug 17, 2022 6:29 pm

If your wife gives half the property to you, then you will be liable to CGT based on half the gain.

That might not mean you will have a similar amount of chargeable gain. Your wife lived in the property and will have some residence relief to set against her gain. You will not have that relief.

You need to work out the differential between the loss of her residence relief and the amount of your gain that will be taxed at the lower rate.

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

Re: Selling a rented property

Postby someone » Fri Aug 19, 2022 6:21 pm

If your wife gives half the property to you, then you will be liable to CGT based on half the gain.

That might not mean you will have a similar amount of chargeable gain. Your wife lived in the property and will have some residence relief to set against her gain. You will not have that relief.

You need to work out the differential between the loss of her residence relief and the amount of your gain that will be taxed at the lower rate.
I thought the rules had changed so that spouses now inherit the PPR history on recent transfers.


Return to “Capital Gains Tax, CGT”