Thank you, Clare.
I hope this is the detail you need.
There are three property assets, each currently held jointly:
1. Marital home, estimated value 800K
2. Rental property, estimated value £450K
3. Land purchased in 2013, estimated value 155K
I believe the marital home plus 5000 square meters of land surrounding it is excluded from the tax year deadline. Does one still have three years to sort out the marital home before CGT (UK) kicks in or has that changed?
We have asked lawyers to change my ownership of number 4 on the list, the land, into my wife's name 100%, and that is straightforward.
That leaves us with the rental property, but here is where things get complicated. We raised a mortgage on the marital home for the purpose of buying the rental property. So, if we divide the houses (marital home to my wife, rental property to me) we have some issues that I would like to understand. That is the purpose of this enquiry:
1. If we divide ownership of the properties as described, we have some mortgage redemption penalties. £2k for penalty of early redemption (which would have dropped to £1K May 2015 and go to zero in May 2016), £2K for a new buy-to-let mortgage on the property until October when the tenants there leave and I move in, say £1K for the buy-to-let redemption in October, and £1K for a new mortgage for him as a resident in the house in October. So, a total of £6K costs.
Obviously, we'd like to avoid some of these costs. The solution would seem to be for me to maintain my interest in the family home at 50:50, declaring it still as my primary residence since I haven't moved into permanent accommodation (I rent a flat currently), thereby allowing us to maintain the current mortgage on the marital home and avoid all this refinancing in the short term.
Declaring the marital home as my primary residence would also ensure that when my wife sold it, she would not pay the full whack of US CGT on the property (she is a US citizen).
I am worried that the HMRC will levy CGT on my share of the marital home at the time of its sale (because I would be maintaining an interest but not living there). However, it seems that my PPR is still the marital home for a period of time. The question is, how long? If I maintain my 50% interest in the property until it is sold, can I claim PRR and can I avoid my wife paying CGT on the "gift" of my 50% share, given that it falls outside the 5 April deadline for making transfers under the "no loss no gain" rule?
Many thanks indeed,