Moving in together - both own houses

northerneng

Can someone give me some advice and I apologise in advance if this question or similar has already been asked.

I have recently got engaged to my girlfriend and we now want to move into my house together.
We both own our own properties and therefore each have our own mortgage.

I have a mortgage that was about 90% when I took it out 2 years ago. My fiancee now has a mortgage that is probably around 50% of the value of her flat.

My original thoughts had been that when we sell her flat we keep the funds we receive from it as savings and deposit for when we want to buy a larger property. As we can more than afford the current repayments on my mortgage and what we get from the flat sale will not be enough to clear my mortgage completely.

We have since been advised that putting this into savings we will have to pay capital gains tax? - Is that right? How much would that be?

Therefore if this advice is correct would we be better off putting the money we receive from the flat sale into my mortgage?
Is there a sum that we could put into savings without paying too much in tax?

Does anyone have any further advice on what we should do?
(Just to save anybody time - we have no interest in renting the flat out)

Thanks in advance for your help.

kingstreet

So many holes in what you've been told.

First, as she is selling her primary personal residence, any gain is free of capital gains tax.

If she moves in with you, she still has eighteen months before any gain on the property becomes taxable and that's only on any gain during that eighteen months.

If you have any doubts, it would be better for you to seek professional advice.

Mattygroves2

Also there is no CGT on savings (which is what you seem to think is the case) - you just pay tax on the interest earned.

When you sell the flat you need to work out which is more beneficial - the interest you'd earn (after tax) against the interest you are paying on your mortgage. This is assuming you've got no other debts between you and you've got your emergency fund sorted out. You also need to check for early redemption penalties on your mortgage.

If you pay off some of your mortgage make sure you get her cash protected legally (Tenants in Common with Trust Deed and wills) until you are married.

getmore4less

kingstreet wrote: »

So many holes in what you've been told.

First, as she is selling her primary personal residence, any gain is free of capital gains tax.

If she moves in with you, she still has eighteen months before any gain on the property becomes taxable and that's only on any gain during that eighteen months.

If you have any doubts, it would be better for you to seek professional advice.

It don't work like that.

IT based on the full gains and the propotion of months that don't get an exemption(PPR, last 18months) + other potential reliefs.

kingstreet

Thank you.

I stand corrected.