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Category: Tax
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Hello. My wife bought a property as a single person in 1997

Customer Question

Hello.

My wife bought a property as a single person in 1997 and lived in it until October 2008.

We bought a property together in July 2008 and we started living together from November 2008. We married in September 2009.

We decided to rent out her 1997 property from the 1st of November 2008 and have been paying tax on the profit each year. This has been declared on my wife's tax return.

The current tenants have decided to move out and we have decided to now sell the property and use the surplus to pay down our joint mortgage.

I just wanted to check that there is no potential Capital Gains Tax exposure since she has been declaring tax on the profit she has made in the mean time?

Regards

Mark
Submitted: 4 years ago.
Category: Tax
Expert:  TonyTax replied 4 years ago.

Hi.

The fact that the property was let and your wife paid tax on the rents doesn't absolve her of a potential Capital Gains Tax liability on any gain she may make on the disposal of the property I'm afraid.

Your wife will be entitled to exemption for the gain related to the period she lived in the property as a proportion of the whole gain and for the gain related to the last 36 months of ownership as a proportion of the whole gain. In addition, as the property was let as well as having been her main home, she will be entitled to letting relief which will be the lesser of:

1 £40,000,

2 the sum of the main residence gain and the gain for the last 36 months of ownership of the property and

3 that part of the letting period gain not covered by the last 36 months of ownership.

Take a look at HS283 for more information on the main residence and Capital Gains Tax.

I hope this helps but let me know if you have any further questions.

Expert:  Nicola-mod replied 4 years ago.
Hello,

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Thank you,
Nicola

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