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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 5860
Experience:  FCCA FCMA CGMA ACIS
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I own two properties. I was looking to transfer ownership of

Customer Question

I own two properties. I was looking to transfer ownership of the second property to my civil partner. May sell it next year but will this hit him with an instant capital tax liability?
Would I need to transfer ownership of the property we'll keep to avoid this issue?
Submitted: 6 months ago.
Category: Tax
Expert:  bigduckontax replied 6 months ago.

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

The transfer of the second property to your civil partner is outside the scope of UK taxation. After that you cannot sell it next year, you no longer own it! He can though and will escape Capital Gains Tax (CGT) on the gain from the current market at transfer and the net selling price as for the last 18 months he is deemed to be in residence even if this is not the case.

I do hope that I have been able to shed some light on the situation for you.

Customer: replied 6 months ago.
if I transfer either property he could sell without any CGT liability? HMRC 's site states he may be liable to pay tax on any gain if he later disposes of it - the gain calculated from when I first owned it.
Can you clarify please?
Customer: replied 6 months ago.
Happy with written response thanks.
Expert:  bigduckontax replied 6 months ago.

Well, yes and no, actually from the date you first owned it or your civil partnership whichever is the later. He will have his non cumulative Annual Exempt Amount (AEA), currently 11.7K, to offset any gain.

Customer: replied 6 months ago.
Just to be clear, if I transfer either property and he disposes of it he'll be liable for any gain since the civil partnership?
In which case I should transfer of the property to be retained? That way any liability is deferred?
Expert:  bigduckontax replied 6 months ago.

Yes, I would advise to transfer which property you intend to use as your sole or main domestic residence. On change of property mix you can declare which to property you wish Private Residence Relief to apply, but, as civil partners, you only have one tranche of PRR between you.

Customer: replied 6 months ago.
Can you advise on what basis any gain is calculated? How would we assess the gain - establish value 12 months ago to assess gain?
Expert:  bigduckontax replied 6 months ago.

Under CGT rules property values rise or fall evenly with time. We all know that this is not the case but that is how CGT works. You will thus be able to establish a value.