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bigduckontax, Accountant
Category: Tax
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I'm currently going through a divorce and looking to give

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I'm currently going through a divorce and looking to give the freehold of a second property I own and rent out to my wife as settlement. Will I liable for any capital gains tax?

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

On acquisition of this second property did you make an election as to which of your two properties Private Residence Relief (PRR) would apply?

Customer: replied 6 months ago.
No. I have not done this.

Then HMRC will decide the position based on the facts and you will be liable to Capital Gains Tax (CGT) on the gain made on the sale. This will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal. The gain will be adjusted by a proportion to reflect the last 18 months of ownership when you are deemed to be in occupation even if this is not the case. So if your total ownership time was 60 months, then 60 - 18 = 42 so 42 / 60 = 70% so that percentage of the gain would be exposed to CGT.

I would like to talk to you but I an responding to your question from a time zone 7 hours ahead of GMT making telephonic communication both impractical and expensive.

Customer: replied 6 months ago.
I do not wish to sell either property but transfer the freehold of the rental property into my Wife's name, keeping the main residence in my sole name.

The effect is the same as far as CGT is concerned. It is a disposal of an asset.

I can talk with you if you wish.

bigduckontax and other Tax Specialists are ready to help you

Thank you for your support.