Moving BTL into wife's name: SDLT and CGT implications
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caronoel
Posts: 908 Forumite
in Cutting tax
My wife is a 20% taxpayer and I pay at 45%
Between us, we own 3 investment properties, and are considering ways to reduce our overall tax burden.
One such way is to move some of the rental income into my wife's name.
One property is worth approx £500k and is fully in my name, as I lived in it before we married. It is now mortgage free and attracts a rent of £24k per annum.
What are the stamp duty implications of transferring to my wife? I understand the SDLT would be nil, as there is no mortgage.
From a CGT perspective, will I lose all the PPR benefits if we ever sell?
Between us, we own 3 investment properties, and are considering ways to reduce our overall tax burden.
One such way is to move some of the rental income into my wife's name.
One property is worth approx £500k and is fully in my name, as I lived in it before we married. It is now mortgage free and attracts a rent of £24k per annum.
What are the stamp duty implications of transferring to my wife? I understand the SDLT would be nil, as there is no mortgage.
From a CGT perspective, will I lose all the PPR benefits if we ever sell?
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Comments
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[STRIKE]Well that would reset your (her?) CGT gain on it to zero, and if you held it a long enough before selling there would come a point that the CGT and saved tax on rental income would more than offset the PPR loss.
So you'd have to start by deciding how long you plan to keep it.[/STRIKE]
OOPS that was rubbish, ignore0 -
errrr?AnotherJoe wrote: »Well that would reset your (her?) CGT gain on it to zero, and if you held it a long enough before selling there would come a point that the CGT and saved tax on rental income would more than offset the PPR loss.
So you'd have to start by deciding how long you plan to keep it.
transfers between spouses are on a no gain/no loss basis. The spouse who receives the property does so at the original cost of the transferor. There is no re-basing of the cost as you state.
https://www.gov.uk/capital-gains-tax/gifts0 -
NoFrom a CGT perspective, will I lose all the PPR benefits if we ever sell?
the wife has never lived in it whilst an owner so has no claim to PRR. The legislation expressly requires that the transferee must have occupied the property as a main residence "at some point in time" in order to "inherit" the transferors claim to PRR
when she transfer it back to you then you have lived in it at some point in time so can continue your PPR claim
para 7 section 222 taxation of capital gains Act 1992
http://www.legislation.gov.uk/ukpga/1992/12/section/222/enacted
However, surely the easier solution is not to make her sole owner, Convert it to a Tenants In Common with you retaining, for example, 1% ownership and therefore 100% ongoing right to claim PRR0 -
errrr?
transfers between spouses are on a no gain/no loss basis. The spouse who receives the property does so at the original cost of the transferor. There is no re-basing of the cost as you state.
https://www.gov.uk/capital-gains-tax/gifts
Thanks ive corrected my misleading post.0 -
I think every one of us should consider gifting his wife half a million.Free the dunston one next time too.0
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