What fraction of my flat should I gift to my wife?

n12maser

Hi all,

We're gearing up to sell my BTL (aim to put it on the market in the Spring) and am thinking about the Capital Gains Tax liability. Based on a few rough calculations, I think I should gift 40% of the ownership of the flat to my wife, with me retaining 60% in order to get the lowest CGT bill.

Here's the figures - what do you think? Any advice very much appreciated.

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Anticipated capital gain on sale: £262k

Months owned: 147
Months I was a resident: 90
Months wife was a resident: 69 months (she moved in after I'd been living there myself for a couple of years)
Months then let out, while we lived elsewhere: 57

She will likely be a lower-rate tax payer for the tax year the CGT will be due, me a higher rate.

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I worked out that if I just kept the flat in my name, the final CGT bill will be aprox £10k.
But that if I own 60%, my CGT bill would be zero, wife's would be £2k to £3k as we'd both benefit from £40k letting relief each + both CGT £12k allowances taken into account.

Have I missed anything, and also is it too late to change the ownership if we are putting the flat on the market this Spring? I've seen conflicting info as to how far in advance HMRC allow this change to have happened in order for it to affect the CGT.

Comms69

DO you have a mortgage on the property?

n12maser

Yes. An interest-only BTL mortgage that makes up aprox 40% of the value of the property.

Comms69

n12maser wrote: »

Yes. An interest-only BTL mortgage that makes up aprox 40% of the value of the property.

Then you cannot gift anything without their agreement, which will mean remortgaging. Which will mean no sale for a period of at least 6 months.


It's simply not cost effective

n12maser

Ahhhhhhhh - thank you! Did not even think about that.