Tax Implications of a house each following marriage?

Skintski

Hi All
I get a little lost with all things tax related so I’m hoping you can help please.

My partner moved in with me a year ago and rented his own property out privately. We treat the two properties independently as having both been married before we liked the idea of retaining our own houses in case anything should go wrong so I look after mine and he looks after his and he takes the rent from it which he pays tax on. We’ve since decided to get married (hopefully later this year) but we wondered whether there would be any change tax alterations because we were married rather than two single people. Does the rented property essentially become a second home? Is there any other financial implication we should be aware of regarding potentially selling it in the future? We are not financially linked in any way. I suppose the short version is, does being married make any difference when owning two houses please?

Thanks for your help.

oldbikebloke

Skintski said:

I suppose the short version is, does being married make any difference when owning two houses please?

not really. It is not a "second" home since it is let and is the home of the tenants, not yours or his second anything.. 

- tax on rental profit falls on the person who is legally entitled to that rent ... in your case each property is in your respective sole names, so nothing alters there. Women fought and won the battle for independent taxation, rather than being taxed as a "chattel" of their husband, many decades ago so nothing changes with your marriage.

- In principle there is a small advantage to being married in that ownership transfers between spouses are tax free. However, in your case, making you a co-owner of his now let property would only make sense if he is higher rate taxpayer and you are basic/no taxpayer. If not, doing so would be counter productive because it used to be his main home, it was never your main home. You cannot "inherit" his claim to main home relief for Capital Gains Tax purposes when it is sold, and you cannot live there as a married couple to enable you to build up a claim of your own whilst owner whilst it is let. A married couple can only have one main residence between them, it must be the same property for both, and obviously cannot be a property that is let since that cannot be "your" home. So, making you a co-owner only makes sense if you save a lot more income tax as a couple on the rent due to respective differing tax brackets, than he loses on giving up part claim to CGT relief.

Skintski

Thank you. That’s  most helpful.