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Transfer of property into joint names. Capital gains tax


Written by Ray Coman


Transfer of property into joint namesA common concern for married couples is about moving property into joint names.  Any property which is not the owner’s home is liable to tax and with the increase in property values in recent years, capital gains tax is a growing concern.  Transfers between spouses are exempt from capital gains tax. However, there are benefits and risks to the transfer of property in these circumstances.  The Finance Act 2020 has also removed some of the capital gains tax dilema that used to hamper decision making in this area.


Use of annual exemption and unused basic rate of spouse

Principal private residence relief

Letting relief

Deemed PPR intact regardless of marriage

Exposure to loss of PPR on divorce

Tax planning


Use of annual exemption and unused basic rate of spouse


The exemption from tax on transferring property into joint name presents an opportunity to save tax.


Each UK taxpayer is entitled to an annual exemption from capital gains tax.  By transferring a property into joint names there would be two lots of annual exemption (of £12,300 for 2020/21.)  Therefore, the tax free gains for a couple could be £24,600 as compared with the tax free gains for an individual of only £12,300.  A gain is taxed at 18% to the extent that total gain and income is less than the basic rate tax threshold (of £37,500 for 2020/21). Gains are taxed at 28% to the extent that the gain increases total income and gains above the basic rate tax threshold.


There is an opportunity to save tax by moving property into joint names, where the transferee is liable to tax at a lower marginal rate.


Principal private residence relief


A taxpayer is not liable to capital gains tax on disposal of their home because of principal private residence relief.  Where a property owner has not always lived in their property there are certain periods which are deemed periods of occupation.  From 6 April 2020, this includes the final 9 months of occupation.


An acquiring spouse inherits the period of occupation of the disposing spouse for the purpose of calculating principal private residents’ (PPR) relief.  This is explained in section 222 (7) of the Taxation of Chargeable Gains Act 1992 (TCGA.)


This is a valuable ruling because it allows the tax benefits of transferring property ownership into joint names while preserving principle private residents’ relief.


Letting relief


Update.  Since the 2018 Budget, letting relief is only available to live-in land .  Therefore.  This consideration will now only affect a minority of landlords, and even fewer who are married.


There is a further ‘letting relief’ where a property is let that has been the owner’s home.  The gain which relates to the period that the property was let is exempt from tax.  However, the amount of gain which can be exempt is capped at £40,000.


However, there is one letting relief per person. Therefore, the maximum letting relief, for the couple, would double to £80,000 for a property in joint names.  There is the potential for a substantial capital gains tax savings if the property obtains letting relief.


Under section 223 (4) of TCGA states that, to obtain the relief, the property must be let by the property owner.  Therefore,


  • Letting relief would not be obtained if transferred to the spouse if the couple resumed occupation between the tenants moving out and the property being sold.
  • However, letting relief will be available for both spouses when the matrimonial home is transferred into joint names and subsequently let.


The restriction above used to place some taxpayers in a quandary because, PPR was only available if the property was transferred while the spouse was living in the property.  Since the Finance Act 2020, it is no longer a requirement for the acquiring spouse to be living in the property at the time of transfer to inherit deemed periods of occupation for PPR purposes.  Therefore, if letting relief is available it is better to transfer the property while it is being let.


The April 2018 Budget narrowed the conditions in which letting relief can be claimed.  From the 6 April 2020, letting relief is only available to landlords who have lived-in with the tenant.  HMRC have clarified that the relief will not be available for periods where the owner was or is in shared accommodation with the tenant.  Therefore, lettings relief applies where the owner no longer shares accommodation with the tenant.  However, the relief will only cover so much of the period as the property was being shared with the tenant.  It is possible in these narrow circumstances for a spouse to inherit letting relief.


Deemed PPR intact regardless of marriage


It is possible that an ‘inherited’ period will overlap with a period when that person had another PPR.  However, this will not prevent the new owner obtaining PPR relief on both properties.  The inherited period is used only to calculate the letting relief and principal private residence relief ‘fraction.’  For example, if a new wed jointly owns a property previously held by just one partner, the person moving in does not become liable to capital gains tax, just as a consequence of owning a property before moving in.


Deemed period of ownership can still be inherited by the transferee spouse even where the transferee spouse had a PPR during that deemed period.  This overrides the usual rule that a person can only have one PPR at any one time.


The number of principal private residences is one per married couple.  Therefore, the number of possible exempt properties halves when a couple marry.  With joint financial status, some couples may be able to offset the reduction in PPR by acquiring a higher value home.


Update.  Following the Finance Act 2020, for disposals on or after 6 April 2020,it is no longer a requirement for the transferee spouse to be living in the property at the time of transfer for the deemed periods of ownership to be inherited.  This effectively means that the annual exemption and unused basic rate of a transferee spouse can be used without any loss of principal private residence relief for the couple.


Exposure to loss of PPR on divorce


If a couple separate, with one partner living in a new home and the other partner staying the matrimonial home, the partner living in the new home will be liable to tax.  Under section 225B (of the Taxes and Capital Gains Act 1992), property of departing divorcee continues to be eligible for PPR.  However if the departing divorcee buys a new home, and made a claim for Section 225B to apply, they would then be liable to capital gains tax on the home they bought after divorce.  This is because a person can only have one PPR at any given time.


A Mesher order can be used where the departing spouse does not wish to force a sale of the former matrimonial home until children have reached adult age.  This is expanded upon in the section below on Tax planning.


Tax planning


Principal Private Residence relief is among the most generous tax exemptions in the UK system.  It provides a significant opportunity for retaining personal wealth.  A few simple measures taken at the right time can significantly reduce tax liability.  The loss of PPR and letting relief on half of the property could well be greater than any tax saved by doubling the annual exemption and saving in marginal rate.


It is highly tax inefficient for a person to be both landlord and tenant at the same time.  Cash received as letting income will likely be taxed, whereas cash paid in rent will not obtain tax relief.  For some sole traders use of home as office could be available.  Furthermore, there is a rsk about loss of PPR.  Certain periods of absence can be regarded as a deemed period of occupation where the property is re-occupied.  However, if left too late the tenancy agreement might not allow for a re-occupation of the property in time.  Couples often leave historical property ownership arrangements in place.  An investment property should be contemplated - for tax purposes - once a person or couple have acquired their home.


A Mesher arrangement is one in which a property is placed in Trust following divorce.  Any period during which the departing spouse lived in the property and up to the date the property is placed in Trust is eligible for princiapl private residence relief.  Under section 225 of the Tax and Capital Gains Act 1992, the property still qualifies for PPR relief provided the property is occupied by the beneficiary.  Since the departing spouse did not have beneficial ownership of the property while it was held on Trust, that period will not be regarded as a period of absence for PPR purposes.  The Trust usually ends when the child reaches a certain age.  Gains related to the period after which the Mesher Order is no longer effective are chargeable to capital gains tax.  The final 9 month period of ownership could exempt periods during which conveyance arrangements are being made.


Separate reports cover the tax implications of a transfer of property into joint names for income tax, inheritance tax and stamp duty


#49 Ray Coman, FCCA, CTA 2021-10-02 16:24
Dear Yukta,

Market value at the date of transfer determines consideration in the case of a gift. This means that capital gains tax would be calculated by reference to current market value.

the only exception is transfers between spouses which occur for no gain/no loss for tax purposes.

On subsequent disposal of the property to your son, market value would also be used for determining taxable gain. However the portion of the property transferred by the other couple would have a higher 'base cost' for CGT purposes.

In simple terms you would not therefore be tax twice on the gain, once when other couple transfers and again when transferred to child.

Consider as well stamp duty implications and in this light whether it would work out cheaper for the other couple to transfer direct to child.
#48 Ray Coman, FCCA, CTA 2021-10-02 16:18
Dear Michael,

You and your wife each need to fill in a Tax Return on the disposal of jointly owned property. There is no joint Tax Return in the UK for married couples.

The most common arrangement for married partners is that each spouse owns 50% of the property. The tax system will automatically tax you as such, unless, you have a legal agreement showing a different percentage ownership and a form 17 was filed with HMRC prior to disposal of the property.

If you are not sure, you almost certainly own the property 50:50. In that case, half of the expenses are tax deductible from your gain, and half from your wife's gain.
#47 Yukta 2021-09-18 19:39
My question relates to a 2properties owned by 2 married couples and each owns a quarter of the share of 2 properties. The couples now want to own a property each rather than quarter of each of the two properties. What is the capital gains tax implication( tax implications) of this decision and what is the best way forward on this decision. Once this is resolved we would like to pass this to our child and it's implications.
#46 michael 2021-09-14 18:30
afternoon. i need help with filling Gain tax. me and my wife sold flat (in join name) and i have a look at gain tax form and i am confused. 1. Do we both have to fill separate form?
2. If we have to fill separate forms do I have to to split all the numbers how much it cost , for how much was sold, expences ie.)?

#45 michael 2021-09-13 21:35
welcome. I am looking for help with filling Capital gain tax. me and my wife sold the second property which was on join name. We are maried and living together in our main house. I'll have a look in to filling the Gain form and I am confused.
1. do we both have to fill the form separately?
2. if we have to fill separate form do I have to to half everything in term of expenses, amout when bought property and gain?

please help
#44 Ray Coman, FCCA, CTA 2021-08-24 11:25
Dear Dajan,

A capital gain tax forecast, based on a specific set of circumstances would be subject to a separate engagement and therefore fee. A gauge of my prices can be found on the pricing page, however a fee in the region of £100 to £200 would be typical for a relatively simple forecast.

Death creates a capital gains tax free uplift in value, and the transfer of assets from one parent to surviving spouse could therefore save you tax as a family as compared with transfer of property as a lifetime gift, also known as PET (potentially exempt transfer.)
#43 Dajan 2021-08-21 09:02
Dear David,

Thank you for your information on your website.

There is a second property bought by Mum, Dad, Son as joint tenancy, all equal shares. To let out. Bought for a total value of 50k.

Dad dies, property market value is 100k
Mum dies, property market value is 200k

Son transfers house to himself and spouse (joint tenancy), market value 200k. Still used to let.
They sell house when property market value is 300k.

What would be the CGT for the Son and his spouse?

#42 Ray Coman, FCCA, CTA 2021-08-14 12:11
Dear Marie,

Transfers between spouses occur for an amount that gives rise to neither a gain nor a loss. Therefore your husband could gift that or any other property to you to make use of your annual exemption.

You do not need to wait until your brother-in-law has died or vacated the property or any other event to make use of the spousal exemption.
You are subject to capital gains tax at the higher rate to the extent that income and gains exceeds the higher rate tax threshold. Therefore, transfer of property does not necessarily result in less tax. let us say your husband has unused basic rate and you do not, the extra tax paid by you as a couple could outweigh the benefit of doubling the annual exemption. Other factors, such as your respective brought forward capital losses could also affect the capital gains tax position.

Death creates a capital gains tax free uplift in value. Therefore if your husband disposes of the 50% share inherited your brother in law, shortly after your brother in law's death he might not have any tax liability on that portion in any case.

Your husband could consider his Will so that should he die, your brother-in-law can still continue to live in the property and your husband's share could benefit from principal private residence relief under Section 225 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992.) This is a complex area. You could also look into Trusts for vulnerable people which benefit from preferential tax treatment.
#41 Ray Coman, FCCA, CTA 2021-08-14 11:52

It is no longer a requirement for your wife to have been living in the property when she transferred it to you in order for you to inherit her period of occupation for the purpose of calculating PPR relief.
#40 Marie 2021-08-06 12:59
Hi Ray
My husband inherited 50% of his mothers home, 5 years ago. My brother in law owns the other 50%. He continues to live in house, as was her spoken wish until he dies. He is blind and disabled and it is his only home, he will leave his share to my husband on his death (if not used for care home fees). We do not receive any money from him, and we help him with shopping cleaning and hold LPA for him, this enables him to continue to live there.
Can my husband gift half of his share to me to use both the capital gains tax relief if and when we sell it.
Thanks Marie
#39 David 2021-07-31 09:24
Married in 2016. Wife owns property bought in 2007, her PPR until 2014, when we moved into owned property in joint names. Her property let since 2014. I had not owned property as PPR between 2007 and 2014. Can I benefit from her PPR fraction relief if she now transfers 50% equitable ownership to me?
#38 Ray Coman, FCCA, CTA 2021-06-04 13:14
Dear Ross,

Yes the property is transferred to your wife for capital gains tax purposes for such an amount that gives rise to neither a taxable gain nor an allowable loss. Therefore the original cost, plus an other improvement costs. From a CGT perspective what is relevant is the total cost of the property and the percentage ownership share on the disposal date.
#37 Ross 2021-06-03 17:48
Hi Ray,

I've a property held jointly with my wife. Prior to her name being put on the title deeds, I carried out renovation works on the property. When I go to sell, I'm wondering do those renovation works only pull into my CGT computation or half into both mine and my wife's? Thanks, Ross.
#36 Ray Coman, FCCA, CTA 2021-04-14 09:46

Your wife inherits your base cost for capital gains tax purposes. Transfers between spouses occur for an amount that gives rise to neither a gain nor a loss. Therefore, if she is also non-resident at the time of disposal the April 2015 would apply to her. I am not sure where you are finding an April 2017 re-basing.
#35 Alan 2021-04-12 17:01
Hi Ray,
I have been Non UK resident for several years. I would like to transfer my properties into joint ownership with my current wife ,but would I lose my automatic rebasing of the CGT cost base of April 2017 for these properties should we sell them in future before I come back to the UK. The reason for the transfer is for income tax reasons on the rental income which, for now I am the higher rate tax payer and my wife receives no income at all. Would you kindly offer some advice or suggestions on this ? Many thanks, Alan
#34 Ray Coman, FCCA, CTA 2021-03-09 13:10
Dear Francis,

You have understood correctly. Transfers between spouses do not give rise to capital gains tax.

To say capital gains tax will be half what a single person will pay is not correct. You will each be entitled to the annual exemption. This is likely to be a tax saving.

To the extent that combined income and gains make you a higher rate tax and do not make your wife a higher rate taxpayer you would save tax on the difference.

If it is a large gain, it will mostly be taxed at the higher rate and therefore the tax saving would be a lot less than half.

If your wife is now receiving rent, she will need to declare his on her Tax Return.
#33 Francis 2021-03-08 13:14
Hi Ray,
I bought an investment flat (no mortgage) and have been renting out for some 20 years. I now would like to add my wife to the title deeds as joint owners to make it more tax efficient when I sell the property in say 2 years time. I understand that there is no capital gains tax when I add my spouse to the deeds. My spouse will also receive half of the rent. I have assumed that when I sell the property the capital gains tax will be half of what a single person will pay. Is this correct?
#32 Ray Coman, FCCA, CTA 2021-02-15 14:45

You acquire your husband's half in 2021 for an amount that gives rise to neither a gain nor a loss. This means, effectively, the cost for capital gains tax purposes is what you bought it for.
You do not get any uplift in value in 2021 for capital gains tax purposes based on whatever his half is.

As an aside, you would get a capital gains tax free uplift in value where a property is acquired via inheritance.
#31 Ann 2021-02-14 16:36
Property bought in 1997, tenancy in common married couple. Not been lived in as PPR as another property nominated for PPR. If my husband signs his half over to me in 2021, if I were to subsequently sell it, it being my PPR from the time of 100% ownership, would the fact that I only had a half share between 1997 and 2021 mean that my gain for that time is only 50% of the gain, or am I liable for the whole gain since ownership?
#30 Ray Coman, FCCA, CTA 2021-02-07 14:55

I cannot advise on whether a deed can be changed as that is not my area of expertise. However, I expect it would simpler to create a need deed transferring back whatever you wished to. Transfers between spouses occur for such an amount as gives rise to neither a gain nor a loss of CGT purposes.

Letting relief is only available to live in landlords, so neither of you would be eligible for letting relief unless you have a lodger.

As explained in the article above the transferee spouse would inherit periods of occupation for the purpose of determining deemed PPR. Based on what you have explained it is not obvious to me how your PPR eligibility would be affected.
#29 john 2021-01-29 01:20

property bought in 2014
property let for a period between 2014-2016
husband and wife living in the property since 2016
property will be sold in feb 2021
deed of trust currently in place to transfer beneficial income/ownership from husband to wife

1) can the deed of trust be revoked/annuled/or new deed of trust put in place to use both spouses CGT?

2) if so, will it preserve PPR and letting relief?
#28 Ray Coman, FCCA, CTA 2020-12-20 00:43
Dear Windell,

Thank you for your enquiry. Brought forward losses are set against current year gains. Any unused losses are carried forward and set against the next available gains after deduction of annual exemption.

If the loss exceeds your portion of the gain, unused part would be carried forward. Any unused losses on death extinguish.

For tax efficiency, consider transferring so much of the property to your spouse, as results in a gain in your hands equal to losses brought forward. This prevents wastage of loss.
#27 Ray Coman, FCCA, CTA 2020-12-20 00:05
Dear Lorraine,

Prior to 6 April 2020, the property had to be your husband's PPR at the time of transfer for him to inherit your periods of ownership for PPR purposes. Therefore, as a couple you have lost PPR on 50% of the gain by moving it into joint names. Since the property was no longer let when you transferred it into joint names, your husband would not be eligible for letting relief.

I am not aware of any ESC or other HMRC interpretation that guides to the contrary of what I have explained above. However, if you receive any contrary opinion please come back and contribute it.
#26 Lorraine 2020-12-17 13:07
Hi Ray
I have a situation where I bought a house in 2004 which was my main residence until 2012 when I moved into my husbands house after we got married the same year. The property was then let until late 2018 when it was vacated . It was sold 1st April 2019. Pre sale in April 2019 of this house we were requested to transfer houses into joint names for re-mortgage purposes. I've now got into an issue as we anticipated the gain would be covered by PPR and letting relief but it seems the transfer may have prejudiced on 50% (owned as joint tenants at sale) as it was never my husbands PPR. Sadly we didnt take advice in 2015 and we were guided by the mortgage advisers.
We are now liaising with HMRC . Am assuming (now) the gain is split 50/50 my half share will qualify for PPR and letting relief but what about my husbands ? Is there any relief at all or an ESC ? Appreciate we may have been naive by not getting advice and any thoughts will be appreciated.
#25 Windell 2020-12-10 12:44
Good afternoon,
I understand that there is a benefit of utilising the annual allowance for a 2nd property owned jointly. However, if owner #1 has capital losses in his own name that can be offset against any capital gain on the sale of that jointly held property are the owners obliged to 'split' any capital gain prior to those losses being utilised? Can owner #1 choose to utilise those losses first before any remaining capital gain is taxed?
Thank you.
#24 Ray Coman, FCCA, CTA 2020-10-08 11:04
Dear Idio,

Under the old rules, if you transfer a property to your wife and she was not living in the property at the time of transfer, her half would not be eligible for PPR. Probably you have found that the PPR relief you would receive on one half of the gain achieves greater tax saving than use of your wife's annual allowance.

Transfers between spouses occurs for such an amount as gives rise to neither a gain nor a loss. So the transfer back from your wife should not give rise to a CGT liability.

There is a new regulation effective 6 April 2020:
Section 2 (b) (ii) to "omit “which is their only or main residence”, from section 222 (7)(a) of the TGA 1992:
The original legislation section 222 (7)(a) of the TGA 1992 can be read here:

It used to be a requirement that the transfer occurred while the property is the main residence of your wife lived in it. However since 6 April 2020 this is no longer a requirement.

It is no longer a requirement that the transfer occurs while the property 'is' her main residence.

This will help save tax for married couples in the same situation as you.
#23 Idio 2020-10-05 19:53
Hi Ray,

I have a property that I bought in 2007 and lives in until 2012. I got married and we moved out into another home that we bought. I then let it out but transferred 90% ownership to my wife in 2014 to benefit from her lower tax rate. I'm looking to sell now - would transferring back to me give it the full PRR now? Or if there was a way to legally null the prior declaration of trust?
If that's the case, I guess it would make sense to transfer a % that would maximise her allowance?

#22 Ray Coman, FCCA, 2020-07-15 09:47
Dear Shahzeb,

You need to be living in the property when your wife transferred it to you in order to inherit her period of occupation for the PPR relief to apply.

If she transferred it to you while you were not living in the property, you would not be eligible for that period of PPR.

The benefit of transferring a property into joint names is a potential doubling of the annual exemption and use of any of your unused basic rate.

The pitfall is that if you are not eligible, your share (in this case 50%) would not be eligible for PPR. Consider transferring back into your wife's name prior to disposal.

In the rare circumstances that moving back into the property is practical prior to disposal, consider transferring the property into joint names once you have moved back in. Usually the cost of moving home outweighs any tax benefit from doubling of the annual exemption.
#21 Shahzeb 2020-07-06 15:04
Hi Ray,

My wife and I had a house together for 213 months which was recently sold, My wife occupied the house as her main residence for a period of 128 months and I know that she can claim the PRR relief for that period, however, my question is do I also get PRR for 128 months to deduct from my share of the gain if the house was in both our names as it would be my deemed occupation and we are not separated?

or is it just the one PRR relief that can be deducted from my wife's share of the gain and not mine?

Also if PRR does apply to me then can twice the PRR and twice the CGT allowance be deducted from the net gains before being split 50/50 to get to mine and my wife's taxable gain?

#20 Ray Coman, FCCA, CTA 2019-08-22 16:33

Your wife inherits your periods of ownership and occupation for the purpose of calculating PPR. The property was also let by her, and therefore she would be entitled to lettings relief.

Lettings relief is capped at £40,000 per person, so if you only owned 25% on eventual disposal, there is more likely to be a lettings relief restriction.
#19 Nigel 2019-08-22 15:48
Hi Ray,
I have a similar situation having sold my old flat. My partner (now wife) moved in with me shortly after I purchased it in 2007. I transferred a portion of the property into her name (50%) before we moved out and rented it. More recently, before the sale, we transferred a further 25% to try and reduce our capital gains.

I think we need to split her capital gain into 2 portions I.e. 50% will have PPR and Letting relief applicable and the other 25% not have PPR and Letting relief as we had moved out.

Does that sound right?
#18 Ray Coman, FCCA, CTA 2019-03-03 09:18
Dear Bob,

Transferring the property into joint names would result in loss of PPR and lettings relief, because you were not living in it at the time of the transfer.

Probably the loss of PPR would outweigh the benefits of gaining an additional annual exemption.

You have correctly understood that you would be in a worse position after 6 April, because letting relief is abolished for all property owners except for live-in landlords (i.e. those with a lodger.)
#17 Bob Forbes 2019-03-02 20:59
Hi Ray,

Philip Hammond’s destruction of Letting relief in the 2019 budget has sent shock waves through the accidental landlord community and I now have to consider evicting my tenant & selling the flat ASAP!

I purchased a flat in 1990 in my sole name and lived there as my main residence, my partner (now my wife) moved in five years later. In 2006 redundancy meant we had to move and bought a new property elsewhere & the flat rented out. The flat is still entirely in my name and the new property is our PR. I was thinking of adding my wife equallly on the title deed now but from reading the other posts this may not be a good idea, as I would loose PRR and LR when I come to sell (although I would have a small extra CG exemption!). From a purely financial (rather than moral) point of view, what should I do to keep my potentially large Capital Gains to a minimum? If I sell after April 20, I will be in an even worse position.

Thanks Bob
#16 Ray Coman, FCCA, CTA 2018-11-19 18:22
Dear Shona,

The benefit of moving back into the property and transferring it into joint name prior to sale is:

Your husband would inherit your periods of ownership and occupation for the purpose of calculating PPR.
You would be entitled to two lots of annual exemption
You would be entitled to two lots of letting relief (which is capped at £40,000 per person.) Letting relief is being abolished for all landlords (except those with lodgers) from 6 April 2020.
If either of you have income less than the higher rate tax threshold in the year of disposal you would save tax.

The drawbacks of your proposal are:
Cost and aggravation of moving home;
PPR will exempt that period in which the property was your home. There is one PPR per person or per married couple. Therefore, it might not save you much tax.
You would lose PPR relief on your current home while you were living in the other property as there is only one PPR at any one time.
Lettings relief could be a benefit, but this is due to be abolished on 6 April 2020.
#15 shona hannah 2018-11-19 17:39
Hi Ray
I owned & lived in an apartment for 6 years before buying another house (in my sole name) which I now live in with my husband. The apartment has now been rented out for 12 years and I plan to sell it next year. Once my tennants have moved out is it worth me and my husband moving in there & me transferring the apartment into joint names to obtain letting relief for us both to reduce my CGT bill?
#14 Ray Coman, FCCA, CTA 2018-10-11 13:37
Dear Diana,
It is likely that as a couple you would lose entitlement to principal private residence relief and letting relief on half of the gain. This is because the property needs to be transferred to you while you live in it in order to inherit his period of occupation.
#13 Diana 2018-10-11 13:37
Hi Ray
My husband owns a property that he bought in 1990, we met in 1992 and when we got married he rented out his house. we now live in a house that is jointly owned by both of us. (ie our PPR)
He now wants to sell the property, is it worth transferring the deeds to joint names? to reduce the CGT due on the sale
I have never lived in the property, so am I correct in thinking that we would only be allowed one letting relief allowance.
#12 Ray Coman, FCCA, CTA 2018-10-11 13:35
Dear Jack,

Transfers between spouses do not give rise to capital gains tax. The gain will be computed when you eventually dispose of the property to a third party. Technically, there may be a case for stating that you have forfeiting some fraction of your PPR. There may an obscure case law on the matter. In practice, I can see the sense in transferring the property back into your own name to keep PPR intact over the long term.
#11 Jack 2018-10-11 13:33
Hi Ray,

I am in the exact position as Nick from post #3.

I purchased a property in 2010 in my sole name and lived there as my main residence with my partner (now my wife) until 2014 when it was rented out. In 2016 I re-mortgaged the flat with my wife on the title deed, which on reflection seems a bad decision having lost out on PRR on my wife's 50% share of the capital gains.

Would stripping my wife of ownership and having myself as the sole owner again enable me to claw back my PRR? Could you please advise what the best option would be if I were to sell?

Thanks Jack
#10 Ray Coman, FCCA, CTA 2018-10-11 13:10

Good question. Principal private residence is calculated based on sale proceeds and original cost. Market value at the time of transfer to your wife is ignored. You wife inherits your periods of ownership and occupation for the purpose of calculating the PPR percentage. The calculation can get tricky and I would advise seeking professional tax advice.
#9 Stephen Coley 2018-10-11 13:09
Hi Ray.
I've just seen this post and wondered if you could help. I bought a house as a permanent residence in Aug. '92. I added my future wife to the deeds in Dec. '93, and she moved in when we got married in June '94. We've now sold it and HMRC want a late tax return for 16/17 for CGT. As it was empty for a while after we moved out I can only claim 70% PRR. My wife is claiming 64%. She has more basic rate allowance before hitting the higher rate so it makes sense for her to claim half. Market conditions meant at the time my wife was added it was still worth the '92 price, but the sale price was 6 times that. The question is, if we declare she had a half share in 1993 (for her CGT gain), should I enter the 1992 value for mine, as that is what I paid and that is what they ask for on the worksheet, or should I just declare half as I essentially transferred the other half to my future wife in 1993.
Many thanks.
#8 Raphael Coman, FCCA, CTA 2018-10-11 13:06
Dear Helen,

The consideration on a gift is its market value. This means that you would be potentially liable to capital gains tax on the market value less original cost when you gift the property.
Transfers between spouses are free from capital gains tax. Therefore, you would both be entitled to a capital gains tax annual exemption [] on disposal.

If you once lived in the flat you may also be entitled to principal private residence relief and letting relief as the article above explains.

To obtain letting relief, the property must be your husband’s home at the time you transfer it to him. Depending on the figures involved, transfer into joint names prior to gifting to your children could result in a higher tax liability than a straightforward gift.
#7 Helen Evans 2018-10-11 13:04
Dear Sirs, I own 3 flats which I rent out. They have no mortgages but do have high capital gains. I would like to transfer ownership of 1 flat to my 3 children in a tax efficient way. An option might be to first transfer into joint ownership with my husband. Could you advise upon this? Many thanks for your help. Kind regards. Helen
#6 Ray Coman, FCCA, CTA 2016-03-08 21:13

The income sharing ratio has to correspond to the capital sharing ratio for a married couple.

In effect if you wish to split the profits 50:50 you would have divide ownership 50:50.

If you take the view that if you "were to split she would undoubtedly claim 1/2 the assets", perhaps you could consider the tax savings as a couple of transferring the property into joint ownership.
#5 Neil Macmillan 2016-03-06 22:41
Hi Ray,
I have a property bought as a Buy to Let before I met my wife. I am now wondering whether I can simply split the income from the property 50/50 when I declare to HMRC (as the money goes in/out of our joint account and if we were to split she would undoubtedly claim 1/2 the assets) or whether I actually need to do the legwork to have the deeds + Mortgage changed. Unfortunately the mortgage won't play ball and transfer the mortgage without hiking the rate...
Thank you
#4 Ray Coman, FCCA, CTA 2016-02-18 21:32
Dear Nick,

You are correct. If you transfer the property while your wife is not living in it, it is not her PPR at the time of transfer and therefore she would not be entitled to PPR.
HMRC write that “the residence must be [the married couple’s] only or main residence at the date of the transfer”
I should add that transfers between spouse do not give rise to capital gains tax, so you could consider reversing your decision.
#3 Nick 2016-02-11 13:48
I have just read this with dread!!!

I purchased a flat (my only residence at the time) in July 2004. In May 2005 my girlfriend (who became my wife in 2009) moved in and we both lived there until May 2007, when we let it out to buy a house between us. I still own the flat I but transferred it into joint ownership last year to try to reduce some CGT when we come to sell it. Should I not have done this now? Thanks Nick
#2 Ray Coman, FCCA, CTA 2015-11-06 12:29

You would lose out on PPR if you transfer the property into your husbands name. Effectively, PPR would be available on only 50% of the gain, (if you transferred half.) Your husband would not be entitled to letting's relief either. The property is not both owned and occupied by him at the time of the transfer and therefore there is no lettings' relief. You would only get one lot of £40,000 exemption.

You could consider transferring a percentage of the property, which gives rise to a gain which is equal to the annual exemption.
#1 Sarah 2015-10-07 12:25
Hi Ray
I own a flat which my husband and I lived in from Oct 2008-Dec 2012. We married in Sept 2012 and as we were in the process of moving house etc, the flat was not transferred into his name at that stage. The flat has been let out since we moved out in Dec 2012. I was wanting to transfer the property into joint names to take advantage of tax reliefs both for letting (as my husband is liable to tax at a lower rate than me) and on eventual sale. However, as the property is no longer our PPR, would I risk losing a proportion of PPR relief by doing this? I assume from your article that as the property is already let out, lettings relief would be capped at £40k rather than £80k? However, I would still be keen to get the benefit of my husband's CGT allowance if possible (but not at the risk of losing PPR). What would you suggest? Thanks Sarah

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