Capital gains tax split on property sale following transfer of ownership

hjf12345

Hi, we've hunted high and low online for the answer to this but can't find it and don't want to pay an accountant if we can help it.

I bought a property in 2012 and was the sole owner until 2015 when I transferred half of it to my wife (who I'd just married) and so we became 'joint tenants'. We then moved out and rented it as landlords for the next 9 years. 

We've just sold it and are not sure how to split the costs on the gov.uk site. i.e. Do we split the costs 50/50 or just put them under my half?

> Original buying costs (solicitors etc.)
> Improvement costs (new kitchen) - I paid for in 2014
> Private residence relief (from 2012 until 2015 - when my wife moved in for 6 months until we moved out)

We'll be splitting the gain 50/50, based on everything we've read and researched.

If someone can help with the question on costs, that would be much appreciated! Thanks

Phoenix72

A new kitchen may not be a capital improvement.

Did your wife own a property in her own name when you married and she moved in.

Bookworm105

implicit to changing the ownership of the asset is the fact that what you are also transferring is the cost of the asset, not just who it belongs to, otherwise the gain would be 100% as there would be nothing to offset it against, which is obviously rubbish.

As you say you are joint tenants (rather than tenants in common) she acquired 50% at your original cost(s).
The fact she never physically paid those costs is irrelevant.
Your gain is smaller as you now own less of it, therefore you cannot claim all of the costs as some need to pass over to her to offset her gain.

CG22200 - Transfer of assets: between spouses or between civil partners living together - HMRC internal manual - GOV.UK (www.gov.uk)

As you were a) married and b) living together in the property as main home at point of transfer in 2015 she also "inherits" PRR backdated to the original purchase date 2012, not the later date she started living there herself.

see 3rd bullet point, transfers before 2020
CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)