Separation with 2 homes

Jogging23

Hi,

Im hoping someone will know the answer to this.

i am currently in a long term relationship but we are not married. We own 2 properties both in joint names and with both our names on the deeds of each. We are looking at separation, if we were to transfer the deeds so each of us had one property each, of which we would be the sole resident, would we still need to pay capital gains tax when one of us sells in the future? Neither property has ever been rented out, we just have 2 homes so we haven’t pulled an income from them.

if we do pay capital gains I am assuming this would be on the second property we bought (the one with the higher stamp duty cost)? Property was bought over 3 years ago so there is no scope to reclaim higher stamp duty.

Trying to make sure that one of us doesn’t end up at a disadvantage if they end up with a CGT bill when the other wouldn’t (amicable and we want to be fair to each other)

thanks

propertyrental

Which property has been your main residence? This one will have no CGT liability if/when it is sold.

The property which is not your main residence (2nd home, whatever) will have a CGT liability if/when sold. The fact that it was never let out or generated an income is irrelevant.

Jogging23

Thanks for the reply. The first house was our main residence. The second house we bought to use as a holiday property for ourselves. I just didn’t know if CGT still applies if the first house would no longer be my main residence because I’d be moving into the holiday property so that would become my main residence, currently I’d have no plans to sell. It was just on the off chance I did in the future after it had been my main residence for a few years. Thanks

SDLT_Geek

Jogging23 said:

Hi,

Im hoping someone will know the answer to this.

i am currently in a long term relationship but we are not married. We own 2 properties both in joint names and with both our names on the deeds of each. We are looking at separation, if we were to transfer the deeds so each of us had one property each, of which we would be the sole resident, would we still need to pay capital gains tax when one of us sells in the future? Neither property has ever been rented out, we just have 2 homes so we haven’t pulled an income from them.

if we do pay capital gains I am assuming this would be on the second property we bought (the one with the higher stamp duty cost)? Property was bought over 3 years ago so there is no scope to reclaim higher stamp duty.

Trying to make sure that one of us doesn’t end up at a disadvantage if they end up with a CGT bill when the other wouldn’t (amicable and we want to be fair to each other)

thanks

There are some complicated capital gains tax rules for exchanges of jointly owned properties https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg73000 (sometimes called a partition) which can involve a rollover relief.