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I am joint owner of 2 homes (A and B) with my now ex partner

Resolved Question:

I am joint owner of 2 homes (A and B) with my now ex partner (never married). I lived in both homes for 10 years, nominating A as my principal home. Then I elected B as my principal home and let out A for 10 years. I then moved back to A re-electing it as my home again. Property B has never been let. How can I minimise my capital gains tax bill on either/both properties on their sale.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

If A was your main residence for the first 10 years then let out for 10 years- then A has now become your main residence, then the scene has been set - which will allow you
1) Private residence relief for the time you lived there and
2) Assuming rental income has been declared to HMRC - then also an entitlement to private lettings relief.

Property A you lived in for 10 years, and has never been let, so its just the 10 years, plus the last 18 months of ownership (under the private residence relief rules0 that will form an exemption against the gain arising. Again the scene has been set and there is no minimising capital gains on either property- because at one time - each of the properties ceased to be your main residences for a period of more than 18 months.

You do not indicate why the move took place from Property A to B - whether your employer relocated you for work purposes - which might offer further mitigation - but aside from that and your annual capital gain exemption allowance (which is £11,000 for this tax year) it would appear that capital gains will arise on either sale, just based on the facts of absence.

Please do feel free to ask any follow up questions


Thanks

Sam



Customer: replied 2 years ago.

How much is private lettings relief and how much is private residential relief?


 


What if I just hang on to property A until I die and pass it on to my children would they have to pay CGT.?


 


What if I transferred the ownership of A to a trust or something?

Expert:  Sam replied 2 years ago.
Hi Susanna

Thanks for your response

I am afraid each value for private residence relief is based on the years of living in a property/total period of ownership, so this varies for every property sale, that has a capital gain consideration.

The same applies with private lettings relief, which allows exemption on the lesser of
1) The amount of gain on which private residence relief is applied on
b) the amount of gain left over after private residence relief has been applied OR
3) £40,000

If you hang onto the property until you die, then there will just be consideration for Inheritance tax - if your total estate is in excess of £325,000 (current Inheritance tax threshold)

Any property transferred into a trust triggers a capital gain, as this is deemed to be a change of ownership - (as would transfer to anyone other than your spouse or the main one, which is when a property is sold.


Do feel free to seek clarification on any of the above point, but it would be appreciated if you could rate the level of service I have provided ( and you can continue to ask questions on the original topic) as this ensures I am credited for my time

Thanks

Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13777
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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