CGT - two properties on one title... 27 September 2020 at 7:26AM in Cutting Tax 4 replies 102 views

claire111

Hi

I am interested in buying a home which to all intents and purposes is a pair of semi detached houses - currently with internal access between the two.

It is on one title, it was built as a residential care home and has only ever had one title.

I intend to live in one semi, let the other, eventually split the title and sell both.

Will CGT be calculated from the date I purchase or from the date the title is split ?

Many thanks for opinions !

Jeremy535897

Separating the title of itself is not a capital gains tax issue. You can claim main residence relief in respect of the part of the property you occupy. If you never occupy half the property, that part will never qualify for main residence relief. If you use each room from time to time, before it is let, it should still qualify during that time. Once you let part of the property on an exclusive tenancy, the part let will no longer qualify for the main residence exemption.

There are a number of other factors to consider. Off the top of my head:

• apportionment of any improvements to each part of the property
• how will the garden be split up?
• how easy is it to draw up a tenancy agreement before the title is split?
• will you split the utilities and have separate supplies?
• council tax. See https://www.gov.uk/guidance/council-tax-band-changes
• stamp duty, as once the property is split, you will own two properties, which could affect the rate you pay on future properties

claire111

Thanks for your detailed reply. 

I have covered most of your points except for "how easy is it to draw up a tenancy agreement before the title is split?"   I don't think tenants would have any concerns about the Title unless I'm missing something ?



Thanks

Jeremy535897

claire111 said:

Thanks for your detailed reply. 

I have covered most of your points except for "how easy is it to draw up a tenancy agreement before the title is split?"   I don't think tenants would have any concerns about the Title unless I'm missing something ?



Thanks

It's potentially a question of how you define the property. Most tenancy agreements involve "11 Acacia Avenue" or similar. You won't have a unique address for the part let, and there may be other issues. I don't have the legal knowledge to know whether it is a significant issue, but I would ask a solicitor if I were you. It's also more difficult in practical terms if there is no split of utilities.

claire111

Jeremy535897 said:

claire111 said:

Thanks for your detailed reply. 

I have covered most of your points except for "how easy is it to draw up a tenancy agreement before the title is split?"   I don't think tenants would have any concerns about the Title unless I'm missing something ?



Thanks

It's potentially a question of how you define the property. Most tenancy agreements involve "11 Acacia Avenue" or similar. You won't have a unique address for the part let, and there may be other issues. I don't have the legal knowledge to know whether it is a significant issue, but I would ask a solicitor if I were you. It's also more difficult in practical terms if there is no split of utilities.

Ah I see where you're coming from - thank you !