CGT help request

Baitmaster

Hi, I'm trying to work out CGT obligations but things are slightly complex so I'm unsure of how to calculate

Bought the house in Aug 2008 for 125k. Lived there alone until End 2011

- Let 2 rooms from Jan 2012, occupied the 3rd. 3 other rooms in house, all shared (lounge, diner, kitchen, excluding bathroom)
- Married 31 March 2012
- Remortgaged Nov 2012 into joint names so changed ownership. Simultaneously remortgaged wife's house into joint names
- Let 3 rooms from Nov 2012
- We've currently made no declaration to HMRC re: which house was primary residence

Sold house in Nov 2015 for 175k

From what I can tell, I get PPR relief for much of time there, and lettings relief for remainder. I think my CGT obligation comes to 0

My issue is the wife's obligation. She never lived there so qualifies for no relief that I know of. She therefore needs to consider CGT on the full gain - but what is that based on? Full period Aug 2008 - Nov 2015, or pro-rata Nov 2012 - Nov 2015?

TIA for any insight

booksurr

Baitmaster wrote: »

My issue is the wife's obligation. She never lived there so qualifies for no relief that I know of.

not that simple

you married in March 12. You state that you continued to occupy the 3rd bedroom until Nov 12 yet you also say she never lived there?

no election was made as to main residence (and it is now far too late to do so given there is a 2 year time limit) so there are 2 issues:
a) a married couple can only have one main residence and it must be the same for both of them
b) in the absence of an election, which property is the main residence is a question of the facts of how each was used. "You" remained in occupation until Nov 12 using the 3rd bedroom to live in. You may well have done, but did you actually live there, and can you prove it on paper?

You state the wife "never lived there", so on face value you are correct that she cannot claim PRR (even if it was the marital main residence), as she never occupied it during the period she was an owner. Transferring it to her after "you" had moved out in Nov 12 is cast iron that she cannot be eligible for PRR. However, there is a small window of possible claim to PRR if the transfer was before "you" moved out, but it depends wholly on how you and she actually lived there, even if only for a few days after she became owner???


I'll assume you have apportioned your own letting relief claim to reflect the fact that only 1/3 of the property was let and have claimed PRR on the remaining 2/3 between Jan 12 - Nov 12???

Baitmaster

Hi thanks for the input

To clarify, I married 31 March so I already assumed that I have to consider the other house as the joint property from that date, not this one. Sorry I wasn't clear on that

I've considered a pro-rated PRR for the period 01 Jan 12 to 31 March 12

April 12 to Nov 12 I'm classing as full let for CGT purposes although I wasn't generating full income for that time

I suspect that the wife has to pay CGT on the full gain from Aug 08 to Nov 15, but that seems a tad harsh so I'm hoping that there might be some way to either revalue in Nov 12 or pro-rate from that time so that she only pays CGT on the gains from Nov 12 to Nov 15, considering she didn't own for the duration

Hope that clarifies