Do I have to pay Capital Gains Tax ??

PrancingHorse

My wife and I both owned our own houses before we got married (nearly five years ago). When we got married, I moved into my wifes house, and informally let out my house to a friend (who paid me some rent, but not with a formal agreement or anything written down). Both houses are still only in one persons name.
My wife and I now want to sell both our houses, and buy a larger house (need bedrooms for children!). I still have a mortgage on my house, my wife does not have a mortgage on her house and owns it outright. I only got round to changing my name on the council tax register 16 months ago, and still have everything (utility bills/bank account/credit card statements) going to my own property.
Do we have to pay any Capital Gains Tax when we sell either home?

00ec25

mortgage irrelevant
the fact you have committed council tax fraud is irrelvant

under CGT law married couples are deemed to have only one main residence , the one they live in, ie your wife's one, therefore the fact each house is in sole names is irrelevant

your one is liable for CGT from the date you got married, the other is exempt as it is the marital residence. Assuming the latter property was also the main home of your wife before marriage then that will be exempt for the entire ownership period ie. pre and post marriage since its occupant has always been entitled to PRR

But, your one is liable for CGT for 5 years out of the total period you have owned it for - this may or may not mean you actually have to pay tax - depends on the amounts involved
all explained on HMRC website
http://www.hmrc.gov.uk/helpsheets/hs283.pdf

seven-day-weekend

Yes, it is liable for CGT, but how much you pay (if any) depends upon various things such as the length of time you have owned it and how much you sell it for. You have a CGT allowance of about £10.5k (I think) and can set also set off any selling expenses against the gain.

http://www.hmrc.gov.uk/rates/cgt.htm

Gonzo33

The final 3 years will also be classed as your main residence. In reality I think you need to speak with the HMRC.

brit1234

PrancingHorse wrote: »

Do we have to pay any Capital Gains Tax when we sell either home?

Yes

I also believe you need to pay tax on your rents recieved if not done so (will go to reducing the national debt and help stop public sector workers get the sack). You will also have to back pay the mortgage company if you don't have a consent to let or buy to let mortgage. If you haven't either of those you can also be arrested for fraud on top.

real1314

PrancingHorse wrote: »

My wife and I both owned our own houses before we got married (nearly five years ago). When we got married, I moved into my wifes house, and informally let out my house to a friend (who paid me some rent, but not with a formal agreement or anything written down). Both houses are still only in one persons name.
My wife and I now want to sell both our houses, and buy a larger house (need bedrooms for children!). I still have a mortgage on my house, my wife does not have a mortgage on her house and owns it outright. I only got round to changing my name on the council tax register 16 months ago, and still have everything (utility bills/bank account/credit card statements) going to my own property.
Do we have to pay any Capital Gains Tax when we sell either home?

1. Did you tell your mortgage provider? If not, you have potentially committed mortgage fraud.

2. Have you been declaring the rental income to HMRC? If not, you have been committing tax fraud.

Has the property increased in value since you got married?

I doubt that CGT is the main thing to worry about; points 1 & 2 are more of an issue. :cool:

PrancingHorse

Thanks for all your replies. Will look at the HMRC link re:CGT for calculating.
Tax being paid on the rental income already.
Told the bank I was renting it out now, re: mortgage/buy-to-let mortgage changes etc.
I've been paying the full council tax amounts throughout.
Again, thanks for all your knowledgable replies - first time I've used this forum - very happy with it!