Capital Gains???

snurge

Hello everyone.

I was hoping to pick the brains of people regarding my current situation.
I own a house that i purchased many years ago, before i got married. My wife also owned a house (she has just sold it as we are looking to purchase a family home).
My house is a joint mortgage with a friend of mine who now lives alone in the property and agrees to pay the mortgage alone in exchange for living in the property alone (instead of me renting out my half to pay for my half of the mortgage).
I make no profit on the house at all but am still part owner on the deeds.
I am currently renting a house with my wife whilst looking for a house to purchase between us.

Hopefully this all makes sense so far.
My questions are these.
1)do i have to declare to the revenue that i rent out my half of the house?
2)if i were to sell the house, will i be liable for capital gains tax of some sort as this is my 'second home?'

Any advice/information that anyone can give me would be greatly appreciated as im starting to get worried that ive not been declaring something that i should or that i might get hit with a large bill in future.

Thanks in advance.

00ec25

CGT
key rules:
1. under tax law married couples may only have one main residence which is thus 100% exempt from CGT becuase it is the marital residence, being as you live together all legal like!

2. any property which was once your main residence is 100% exempt for the time you lived in it, plus the final 36 months of your ownership of it is also exempt . If you moved out more than 36 months before you sold it, then the liable period is total ownership period - time occupied/lived in - 36 months (unless this overlaps with occupancy period). ie the liable period is a % of the ttoal ownership period

Now for your CGT position - a nice little mix of issues but you will need to provide a tad more info for us to be accurate in replies.

Firstly we need to confirm that wife's sale is actually CGT exempt before we consider your property

- So where were you both living after you got married and up to the point at which wife sold her (ex?) "home".
- Did her sale complete more than 36 months after she moved out of the property, assuming you were not livinig in it together up to the point of sale,

Next, please explain the timing of both(?) of you moving into rented so we can unpick this in relation to your own "old" house.

As you continue to own your house then yes you are liable for CGT assuming it is now more than 36 motnhs since you a) moved out of it and/or b) married and lived with wife elsewhere. note the elsewhere includes a renal property - the marital home can be a rental, it is not a requirment that you own it for it to be your "main" home


Landlord status
before we tackle your income tax we need to decide if you are now legally a landlord. I think not - your friend is a resident owner so can't be classed as your tenant so you are not a LL.

Income Tax
others will have to answer this one
in one sense the payment by friend of your share of the mortgage could be held to be a benefit in kind - ie it is a cost being paid on your behalf which you would otherwise have to pay from your own income, that payment is thereofre your "income"

however, as friend is an owner not a tenanat I don't think him paying your share of the mortgage counts as taxable income but i'm not sure of this as clealry you do get a benefit from it since you retain owbnership and thereofre will have a share in the equity being built up through the mortgage payments

snurge

Firstly, thanks so much for the reply. It's been tying me in knots trying to manually research this!!

I moved in with my wife into her now sold house probably just about 36 months ago (can't think of exact dates but three years can't be too far off) and she sold the house in January this year. We then moved into the house we are renting now.

Just to confuse matters even more, we've had an offer accepted on a home we want to buy!!!
Who would have thought that getting married would cause so many problems???