Capital Gains Tax question.

woodbath

Newbie here - any help is appreciated.

So here’s the situation (example £)

 

1. Wife and I got married two years ago and live in my house.
2. My wife has a house which her son (35 y/o) lives in, value approx £300k mortgage £120k
3. Son does not pay rent or bills and claims benefits (limited capability for work-related activity (LCWRA)), will also be applying for PIP soon.
4. We have just moved the Council Tax to Sons name (to claim 25% off for single occupancy) but my wife pays all the bills including Council Tax, mortgage, utilities etc
5. I have a house which both my wife and I live in value approx £280k £10k mortgage
6. Within the next two years, we plan to sell both houses and buy a home together. 
7. We were about to set up a rent agreement so son could claim housing benefit and then could pay us rent.  Son will then rent elsewhere with housing benefit already in place.

 

Question.  If we proceed with (7), Are we liable to pay Capital Gains Tax on my wifes house when we sell?

Question. If we don’t proceed with (7), Are we liable to pay Capital Gains Tax on my wifes house when we sell?

 Any advice is appreciated.

Thanks in advance

Jeremy535897

The rent agreement is evidence of the situation. It doesn't change the fact that a married couple can only have one main residence at any one time, and from the date of your marriage, on the facts as you have stated them, your home is the main residence. If your wife ever lived in the property now occupied by her son, then some main residence relief may be available for periods prior to your marriage. It will depend on the facts. As your wife is the sole owner of the property to be sold, she will be liable for any capital gains tax, which is due within 60 days of completion of the sale of the house.

The grant of the tenancy to the son will be for at least 6 months, and the Renters Reform Bill if enacted will prevent no fault evictions, although selling a property is one reason to bring a tenancy to an end that is reportedly going to remain.