Transfer of property into joint names

Published: 06 Jun 2015

Updated: 09 Jun 2015


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A 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 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 £11,100 for 2015/16.) Therefore, the tax free gains for a couple could be £22,200 as compared with the tax free gains for an individual of only £11,100. A gain is taxed at 18% to the extent that total gain and income is less than the basic rate tax threshold (of £31,785 for 2015/16). 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. This includes the final 18 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

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.
The transfer should occur when the acquiring spouse is living in the property.

To obtain tax relief, the property must be the PPR of the acquiring spouse at the time of the transfer. Letting relief would not be doubled for a couple if the property is transferred while it is being let out. A further risk is that the PPR will be lost on that portion now owned by the acquiring spouse.

As a further restriction, section 223 (4) of TCGA states that, to obtain the relief, the property must be let by the property owner. Therefore, letting relief will be available for both spouses when the matrimonial home is transferred into joint names and subsequently let.

PPR not lost on 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.

The number of principal private residences is one per married couple. Therefore the number of possible exempt properties halves when a couple marry. Where an individual or married couple own more than one property, greater exemption from capital gains tax results from consolidating property investment into the matrimonial home.

The risk about 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.


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.

This article was written by Ray Coman, Chartered Tax Adviser and independent consultant. His company Coman & Co. Ltd. has been established since 2009 and offers a range of tax compliance and tax advice services.


#22 Ray Coman, FCCA, 2020-07-15 08:47
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 14:04
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 15:33

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 14:48
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 12:37
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 12:37
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 12:35
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 12:33
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 12:10

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 12:09
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 12:06
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 12:04
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 11:25
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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