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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We have a second property which is currently in my wife's sole

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We have a second property which is currently in my wife's sole name as it was the house she owned with her ex Husband whom she bought out 4 years ago. The house has been rented out for the last 3 years and we are planning on selling it in the next 12 months. She is just about to sign a new agreement on a buy to let mortgage as the current agreement expires in March.
Would it be better if this property was in both my wife's & my name so that when we come to sell it later this year we will be able to claim two lots of £11,100 capital gains tax allowance against any gain made.
I would expect the gain on the property to be circa £100,000
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. The answer to your question depends on whether the CGT payable by you will exceed the tax relief lost due to the main residence relief and letting relief your wife will be entitled to if the property was ever her main home being reduced by 50% if the property is put into joint names, notwithstanding the fact that you will get an £11,100 exemption to use against your share of the gain. Take a look at HS283 here which explains how main residence relief and letting relief work. Example 9 shows how the reliefs are calculated if both are due. Letting relief is only available if the property was ever the main home of the owner or part-owner. There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will each pay will be dependent on the levels of your incomes in the tax year the property is disposed of. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Hi Tony, not sure if this effects any sort of tax relief in the property which is currently in my wife's sole name. We live in our main property & it is in our joint names. My wife lived in the property which is in her sole name & we are looking to sell in the next 12 months for 9 years as her main residence.
Expert:  TonyTax replied 1 year ago.
How long has your wife owned the property partly or wholly?
Customer: replied 1 year ago.
Tony, apologies for the delay in getting back to you. My wife has owned the property we are looking to sell for 12 years and it was her main residence for 9 years up until 2012 & has been in her sole name for the last 5 years.
Expert:  TonyTax replied 1 year ago.
Thanks.Leave this with me while I do some calculations.
Expert:  TonyTax replied 1 year ago.
You should really divide the gain into months rather than years to get more accurate figures but look at Example 9 in HS283. The property has been owned by your wife for 12 years, The gain for the period that she lived in the property will be exempt from CGT as will the gain for the last 18 months of ownership regardless. That accounts for £87,500 (£100,000 / 12 years x 10.5 years). That leaves £12,500. As the property was both your wife's main home and it was let, she will be entitled ti letting for that part of the gain not covered by the last 18 months of ownership. This will be the lesser of £40,000, £87,500 and £12,500. Therefore, letting relief will be £12,500 and there will be no taxable gain. Assuming the facts and figures you have given me are correct, there is no need to put the property into joint names before it is sold. The CGT position may be different depending when your wife separated from her ex-husband and and bought his share of the property.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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