CGT Liability 2nd Property

Tiglet2

I bought a second property in 2010 which has been rented out until recently. I have never lived in the property. There is no mortgage on the property. Some months ago I added my husband to the title on a joint tenants basis, which I thought would be a good idea for CGT purposes when the time came for selling.

My tenants vacated the property a couple of weeks ago and so I thought it would be a good time to sell the property. The reason for selling was to realise some equity, since I have used most of my savings with gifted deposits for my children to get onto the housing ladder, leaving me without much of a savings cushion. The property does need some money spent on it if I was to let it out again and since I now don't have much spare money I thought I would sell up in its current state.

If I sell it now it's in both our names, we would each get CGT exemption of £11,700 I believe. I would be taxed at 28% for the remainder of my share and my husband 20% for his share.

How long would be acceptable for HMRC to not regard the transfer of equity as a deprivation of assets or to be suspicious that we did the transfer of equity purely to avoid paying more CGT on the sale?

00ec25

Tiglet2 wrote: »

If I sell it now it's in both our names, we would each get CGT exemption of £11,700 I believe. I would be taxed at 28% for the remainder of my share and my husband 20% for his share.

no, you have misunderstood the mechanics of the CGT tax calculation and its rates

you will both pay CGT at 18% and / or at 28% depending on your respective "total taxable income" for that tax year

see step 5 for an example using actual numbers
https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2

Tiglet2 wrote: »

How long would be acceptable for HMRC to not regard the transfer of equity as a deprivation of assets or to be suspicious that we did the transfer of equity purely to avoid paying more CGT on the sale?

not sure what you are asking about here? "deprivation of assets" is not the relevant wording since that applies to council funding for care home costs, not an area HMRC is bothered by

if your husband has failed to declare his share of the rental profits when you transferred ownership to him then you do indeed have a problem with HMRC

if on the other hand, you mean the transfer was after the letting business ended, then yes, HMRC will question the rationale for the transfer and may decide it was done purely to reduce CGT. There is no magic time limit to defeat that, but the longer it is between transfer and sale, the better is the case. However, the fact remains with the letting business ended, there was no point to the transfer other than CGT.

Tiglet2

Thank you for your response. Agree that tax would be charged at 28% for total income.
Yes, apologies, I have misunderstood the "deprivation of assets" phrase.
No, husband has not failed to declare his share of the rental profits since he became joint owner in April so would only have to declare earnings for May and June in the tax year 2018 and 2019. Tenants left on 16th June after serving one month's notice, so no rental income now.

00ec25

Tiglet2 wrote: »

No, husband has not failed to declare his share of the rental profits since he became joint owner in April so would only have to declare earnings for May and June in the tax year 2018 and 2019. Tenants left on 16th June after serving one month's notice, so no rental income now.

so you and he have nothing to worry about over selling the property then since the transfer to him resulted in him paying income tax, so was not done purely for CGT reasons.
sell away .....