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Where Taxpayers and Advisers Meet
second property tax query
-
powellsuepowell@aol.
- Posts:1
- Joined:Wed Aug 06, 2008 3:03 pm
-
Nigel Lord
- Posts:518
- Joined:Wed Aug 06, 2008 2:18 pm
Sue
I assume in my comments below that you and your husband will be treated as UK resident after buying the property in the UK and you are both UK domiciled. Please advise me if this is not the case.
There are generally no major advantages in buying the property in one spouse's name, although it may help equalise your estates for income tax, Capital Gains Tax (CGT) or Inheritance Tax (IHT) purposes. I deal with each of these taxes below:
Income Tax
If you derive any income from a property in the UK or overseas, the profits are chargeable to UK income tax on the beneficial owner of the property. This is not the same as the legal owner (i.e. the personal who has legal title). You could hold the property in any proportion that you choose. This may be varied from time to time to suit your requirements. If the UK property is not to be let there are no income tax implications. Professional advice should be sought regarding the difference between beneficial and legal ownership.
CGT
The same rule regarding beneficial ownership applies in respect of CGT. However, the UK property will only be subject to UK CGT if it is not your main residence for most or all of the period of ownership due to the availability of Principal Private Residence (PPR) Relief. If your property in Spain is also a main residence, you will need to make a PPR election within two years of two main residences becoming available to ensure that PPR relief is maximised. Married couples may only have one main residence between them so the actual legal ownership is irrelevant. Advice should be sought in this area as the potential tax savings are significant.
IHT
As with CGT there may be an advantage in equalising your estates to ensure that the nil rate band (£255,000) is maximised by both spouse. This type of planning should be undertaken in conjunction with efficient wills and estate planning in general.
Our firm specialises in this area of taxation and will be pleased to act on your behalf.
Nigel Lord
Lord Associates
Caxton House
Old Station Road
Loughton
Essex IG10 4PE
020 8418 9101 or 07769 931 852
info@lordassociates.co.uk
I assume in my comments below that you and your husband will be treated as UK resident after buying the property in the UK and you are both UK domiciled. Please advise me if this is not the case.
There are generally no major advantages in buying the property in one spouse's name, although it may help equalise your estates for income tax, Capital Gains Tax (CGT) or Inheritance Tax (IHT) purposes. I deal with each of these taxes below:
Income Tax
If you derive any income from a property in the UK or overseas, the profits are chargeable to UK income tax on the beneficial owner of the property. This is not the same as the legal owner (i.e. the personal who has legal title). You could hold the property in any proportion that you choose. This may be varied from time to time to suit your requirements. If the UK property is not to be let there are no income tax implications. Professional advice should be sought regarding the difference between beneficial and legal ownership.
CGT
The same rule regarding beneficial ownership applies in respect of CGT. However, the UK property will only be subject to UK CGT if it is not your main residence for most or all of the period of ownership due to the availability of Principal Private Residence (PPR) Relief. If your property in Spain is also a main residence, you will need to make a PPR election within two years of two main residences becoming available to ensure that PPR relief is maximised. Married couples may only have one main residence between them so the actual legal ownership is irrelevant. Advice should be sought in this area as the potential tax savings are significant.
IHT
As with CGT there may be an advantage in equalising your estates to ensure that the nil rate band (£255,000) is maximised by both spouse. This type of planning should be undertaken in conjunction with efficient wills and estate planning in general.
Our firm specialises in this area of taxation and will be pleased to act on your behalf.
Nigel Lord
Lord Associates
Caxton House
Old Station Road
Loughton
Essex IG10 4PE
020 8418 9101 or 07769 931 852
info@lordassociates.co.uk
