CGT when selling property

scottishblondie

Hoping for some help understanding whether I can reduce any CGT due on the sale of a property.  Situation is:

• Property purchased for £159k in December 2003 as my main residence
• Moved out in January 2013 to new main residence
• Commenced letting property in March 2013
• Hoping to sell in early 2023 for somewhere in the region of £215k (this is a guess, as I've not had a proper valuation done yet only over the phone)

The property is currently in my name only, mortgage free, and I am a higher rate (Scotland) tax payer.  I understand there are capital expenses I can deduct from the gain (stamp duty, fees), and that roughly half of it will be exempt due to PRR, I'm estimating a £27k gain.  Take away my allowance of £12.3k, I believe that means I would need to pay about £4.1k in tax.

I am married, and my husband is an intermediate rate tax payer (Scotland).  Is there any benefit in transferring some or all of the ownership to my husband before selling?  I can't quite wrap my head around whether or not it would make any difference this late in the day.  Or is there another way to reduce my liability?

Thanks for any advice.

macman

If you transfer some of it to your husband and then sell it, you can use the allowance of £12.3K each. 
Will transferring part of it push your husband's marginal tax rate up to the higher level of 28% though? You are not going to reduce your rate to 18%, as you are already a higher rate taxpayer.

scottishblondie

macman said:

If you transfer some of it to your husband and then sell it, you can use the allowance of £12.3K each. 
Will transferring part of it push your husband's marginal tax rate up to the higher level of 28% though? You are not going to reduce your rate to 18%, as you are already a higher rate taxpayer.

If I'm understanding correctly how it works, I think it would push his rate up to 28%.  However I was hoping that if we could split the gain between us then the allowance would almost cover it, leaving less of it to pay tax on.  Even if we both pay at 28%, we would only have £2.4k over the allowance to pay it on - so £670 in tax rather than £4100.

I just wasn't sure if that would work when I've owned it in my sole name for nearly 20 years, with his name only on it for the last few months?  Seems like it would be more complicated than that?

Jeremy535897

There are very cautious people on here who would say that there is a risk of a HMRC challenge unless the transfer takes place a year before the sale, and ideally before a sale is contemplated. My own view is that HMRC are unlikely to succeed in an argument unless you do the transfer at a time when a sale is inevitable. HMRC's argument then is that you gave away a share of the proceeds of sale rather than a part of the property. As there are no stamp duty issues, all you risk is some legal fees.

You can either transfer part (it doesn't have to be half) of the property at the Land Registry, or you can do a declaration of trust, which means that, as far as the purchaser is concerned, you still own all of it. This used to be the cheaper option, but with the bureaucracy imposed by the Trust Registration Service, that may no longer be the case.

If you transfer a part of the property formally via the Land Registry, it does not help your case if the proceeds are still paid into your bank account as opposed to a joint bank account or your individual bank accounts according to the split.

Any rent received after the transfer is assessed 50:50, unless you split the property unevenly and complete a Form 17. Again the rent should be paid into the appropriate bank account(s).