Capital Gains Tax on a shared ownership property

Jeremy535897

oldbikebloke said:

Jeremy535897 said:

oldbikebloke said:

Jeremy535897 said:
Yes, I realised that, but it reminded me that there is the odd hole in main residence relief and spouse transfers that might apply here.

agreed
we assume ownership now 50/50 so effectively he has gifted 17.5% to her perfectly free of tax as we know under spousal transfer and she therefore "inherits" his purchase cost of the original 35% even though she never physically paid that
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64950

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22200

So to repeat what you have already said,  maths boils down to: combined costs x share owned (50/50?)

Most of the time that's true, but if for example the property was let out before the wife acquired an interest , presumably when the balance was paid (unlikely I know), the wife would have no main residence relief on her half.

agreed, and as previously discussed, occupation is a primary requirement for a PRR claim.... if a property is let, it cannot be occupied!

Yes, the anomaly (as I see it anyway) is as follows.

Example 1 husband owns property, lives in it with wife 2 years, lets it for 2 years then sells. Gives wife half after 1 year. Taxable gain on each 50% of 15/48 of gain
Example 2 husband owns property, lives in it with wife 2 years, lets it for 2 years then sells .Gives wife half after 3 years, Taxable gain on husband 50% of 15/48 of gain. Taxable gain on wife 50% of whole gain

oldbikebloke

Jeremy535897 said:

Example 1 husband owns property, lives in it with wife 2 years, lets it for 2 years then sells. Gives wife half after 1 year. Taxable gain on each 50% of 15/48 of gain
Example 2 husband owns property, lives in it with wife 2 years, lets it for 2 years then sells .Gives wife half after 3 years, Taxable gain on husband 50% of 15/48 of gain. Taxable gain on wife 50% of whole gain

agreed.
she is not occupying the let property at point she becomes co-owner.
The rule allows her to inherit his base cost, but not his occupation history, so she has no PRR claim.
Expensive!

getmore4less

Does the occupancy of the part not owned initially get back dated?

That seems a bid odd given how it works for other types of part ownerships. 

Jeremy535897

getmore4less said:

Does the occupancy of the part not owned initially get back dated?

That seems a bid odd given how it works for other types of part ownerships. 

Only if it is a main residence at the point of transfer. See section 222(7) TCGA 1992.

callmeted

Thanks all for your comments, this is incredibly helpful. In this case, the property was the main residence for both me and my wife at the point of transfer (she’d been living there since I moved in, before we married). So assume this means it’ll be a straight 50/50 split, as mentioned above. 

Jeremy535897

callmeted said:

Thanks all for your comments, this is incredibly helpful. In this case, the property was the main residence for both me and my wife at the point of transfer (she’d been living there since I moved in, before we married). So assume this means it’ll be a straight 50/50 split, as mentioned above. 

Yes, if you were married at the point of transfer. Was there a significant delay between you paying the first deposit and living in it?

callmeted

Jeremy535897 said:

callmeted said:

Thanks all for your comments, this is incredibly helpful. In this case, the property was the main residence for both me and my wife at the point of transfer (she’d been living there since I moved in, before we married). So assume this means it’ll be a straight 50/50 split, as mentioned above. 

Yes, if you were married at the point of transfer. Was there a significant delay between you paying the first deposit and living in it?

No, not really. Deposit paid in Dec 2012, completed (and living in property) in March 2013

Jeremy535897

Then it should just be 50:50 split, with the restriction on main residence relief outlined earlier for the rented period.