Capital gains selling rented former home

phil_the

When we got married I moved in with my wife and we rented out my old house. We now wish to sell this house. 
I put some very rough figures into the calculator on gov.uk site, and it came up that I'd need to pay ~10000 in capital gains.
Can we get an extra 3000 off if we put the house into joint names? It is currently in my name only. We have been declaring half of rent each for income tax.
We also have another rental property, which we have recently done some renovation work on while between tenants. Can we use some or all of those costs as a capital loss to reduce the CGT bill?
We plan to use the proceeds of this sale to purchase another property which we plan to rent to my wife's sister. Can we use some or all of the costs associated with that purchase as capital losses?
Thanks
Phil.

[Deleted User]

There are a lot of incorrect assumptions here - I suggest that you seek professional advice. 

1) The house that you are selling is in your own name. Have you calculated the principal private residence relief available? As your wife never lived in the property she will be entitled to exactly zero. You would lose half of the relief.  

2) Putting the house into joint names will not knock £3000 off the capital gains tax bill. It will reduce the amount of the gain by £3000. However, HMRC may also challenge this action if done close to sale. 

3) How is the house is in your sole name but the rental income been declared equally? Is the house actually in joint names and you have completed a form 17?

4) Costs of renovation of another property have no relevance to the sale of this property. 

5) Costs associated with the purchase of another property can only be attributable to that property. 

phil_the

That explains it very clearly. Thank-you. 
I should have realised that the 3000 comes off before the tax rate not after, so it would only gain us a fraction of that.
Yes, I used the online calculator at gov.uk to work out the PRR. I lived there for a bit longer than it has since been rented out for, so it came in at ~56% I think. The house has increased from 39000 in 1992 to ~160000 now.
I did wonder if the PRR would not apply to my wife's share. That makes sense, so it is pointless making her a joint owner which was the main reason for my question.

I'm new here, so it won't let me post a link to the gov.uk 'capital gains tax / losses' page. That page doesn't actually state that the losses have to relate to the same asset as any gains, but I wondered if that might be the case, which is why I asked the question. Thanks for the clarification.

I am not sure whether we ever filled in form 17. I'll look into if we need to do that. Thanks.

[Deleted User]

phil_the said:

That explains it very clearly. Thank-you. 
I should have realised that the 3000 comes off before the tax rate not after, so it would only gain us a fraction of that.
Yes, I used the online calculator at gov.uk to work out the PRR. I lived there for a bit longer than it has since been rented out for, so it came in at ~56% I think. The house has increased from 39000 in 1992 to ~160000 now.
I did wonder if the PRR would not apply to my wife's share. That makes sense, so it is pointless making her a joint owner which was the main reason for my question.

I'm new here, so it won't let me post a link to the gov.uk 'capital gains tax / losses' page. That page doesn't actually state that the losses have to relate to the same asset as any gains, but I wondered if that might be the case, which is why I asked the question. Thanks for the clarification.

I am not sure whether we ever filled in form 17. I'll look into if we need to do that. Thanks.

Losses can be set against gains but you cannot claim capital expenditure incurred on one property against a capital gain made on another. 

Please ignore what I said regarding the form 17. Quite simply I am now certain that the property is not owned jointly and it does not apply. 

I am not sure how, therefore, you felt able to declare only half of the income when the property is 100% owned by you. Additionally your wife has declared income from a property in which she has no interest. 

You may have an issue with this with respect to previous returns submitted as they are clearly incorrect. 

Again, seek professional advice. 

Jeremy535897

The situation with jointly held properties is complex, but if someone wholly owns a house and gives half the income to his spouse, the income remains entirely assessable on the husband. Even if there was a declaration of trust to this effect, it would be overridden by the settlement legislation.
Read HMRC's guide. It's a good starting point.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2024
Don't forget the rules on advance tax payments:
https://www.gov.uk/report-and-pay-your-capital-gains-tax/if-you-sold-a-property-in-the-uk-on-or-after-6-april-2020