gifting half a house?

MrsAmanda_2

I've been asking about CGT and had some really helpful replies. Now got another question for you ....

My husband and I are debating whether or not to sell our current home or rent it out. He owns it, bought it in 1996. He/we have lived in it for 8yrs, and it has been rented for the rest of the time.

We're wondering if it's prudent to hang on to it as a long-term asset, or sell it now. As it's our current primary residence, if we sell now, I think we're not liable for any CGT (please correct me if I've got that wrong as it was rented out for a good while). If we keep it, and sell later, we will be liable for CGT for the rented months.

As it's in his name only, we'd only benefit from one set of lettings relief and personal allowance. So we're considering adding my name to it. Is it just a question of 'here you are, dear, have half the house', or is it a lot more complicated and expensive than that? If the change of name means paying stamp duty etc, then it's probably not worth doing.

Any clarification would be gratefully received, thank you.

p00hsticks

MrsAmanda wrote: »

As it's our current primary residence, if we sell now, I think we're not liable for any CGT (please correct me if I've got that wrong as it was rented out for a good while).

I'm not an expert, but my understanding is that you are potentially liable for CTG for the period that it was rented out before you moved in - the fact that is your primary residence at the moment does not remove that liability

jimmo

　
First of all have you seen the amendments I have made to Clapton’s computation on the other thread?
Whilst that one may have made your head hurt it is probably very important for you to come to grips with that one before you move onto your question here.
Have you seen this Helpsheet?
http://www.hmrc.gov.uk/helpsheets/hs283.pdf
I suggest you print off a copy and keep it for reference.
As to your question on here you first need to establish your husband’s potential Capital gains situation if he keeps the house in his name only and then consider what the effect will be if he transfers a half share to you.
At present, he has owned it for 14 years and lived in it 8.
So if he sold it tomorrow 8/14 of his gain would be exempt under PPR. Note that as the final 3 years of ownership are all included in the period of residence he does not get them again.
Lettings relief is available regardless of the fact that the lettings took place before you moved in. I can’t really offer any proof of that other than the help sheet doesn’t say it is not allowable.
So his lettings relief will be the lesser of the PPR, the gain attributable to the letting period, that is 6/14 of the gain, or £40,000.
If he keeps it and rents it out again for 3 years before selling then his PPR will become
8 years worth for the period of occupation plus the final 3 years of ownership and the lettings relief will have to be reworked.
So, basically, if he will be safe from capital Gains Tax if he sells it now, he will almost certainly be safe for another 3 years.
On that basis, putting the house into joint names now would, at best be pointless. Actually it could be a very expensive mistake but let’s not go there if we don’t need to.
However, if the plan is to continue letting the house for considerably more that 3 years I would suggest that you really need professional advice, rather than relying on a forum.

MrsAmanda_2

Oh, this is all too much for my little brain :-)

Jimmo, you're right, we will speak to an expert before deciding what to do. Thanks for the link, and the information on the other thread.

Think I need a lie down now!!

xposis

If you do consult a professional, ask them about Tax Investigation insurance. We had a similar situation and were recomended to take cover against it. There is a good article on MSE

forums.moneysavingexpert.com/showthread.php?t=509349

chrismac1

Lettings relief is complex but getting this sorted should not cost you much - under £200 - but getting it wrong could cost you thousands.