CGT on sale of rental property

ianpalmer2007

If I sell a flat that I previously lived in before we got married can we use my "relief" on the tax returns for both my wife and myself?

The scenario is I expect to make £30k after expenses so if we each declare £15k - £3k allowance = £12k profit then as I lived in it for 10 years and rented for 14 years - can we both claim 10/25 = 40% = £4,800 relief - leaving £7,200 taxable at 18% each = £1296 each or is it only me that can claim the "relief"?

Thank you 👍

BarelySentientAI

Does your wife have any beneficial interest in the flat?

ianpalmer2007

Hi - she is 63 and I changed the ownership to 99:1 by deed of trust in her favour as she doesn't work or have any income and it means we use her allowances. My intention was to reverse it back to 50:50 or 99:1 in my favour - if that makes sense?

Bookworm105

ianpalmer2007 said:

Hi - she is 63 and I changed the ownership to 99:1 by deed of trust in her favour as she doesn't work or have any income and it means we use her allowances. My intention was to reverse it back to 50:50 or 99:1 in my favour - if that makes sense?

the CGT declaration needs to exactly match the beneficial interest so the figures in the first post are wrong if it is currently still 99:1

also bear in mind switching the beneficial ownership shortly before sale with an eye on CGT only gives HMRC  a heads up to exercise one of its more esoteric powers to set aside the change and subject the CGT to the original 99:1 split as in HMRC's view the change was done to evade tax

the advice in your circumstances is to make the beneficial ownership change whilst there is still a rental income being received so income tax is paid at the disadvantage of one of the parties, and therefore the later CGT "balancing" does not seem to be all about CGT only.

ianpalmer2007

Thank you very much for your input 👍 Can I use the rental relief for both of us - 40% each - or just myself? Finally as we are married if I leave the ownership 99:1 in her favour could my wife use my rental relief allowance to deduct 40% from her CGT liability?

Bookworm105

ianpalmer2007 said:

Thank you very much for your input 👍 Can I use the rental relief for both of us - 40% each - or just myself? Finally as we are married if I leave the ownership 99:1 in her favour could my wife use my rental relief allowance to deduct 40% from her CGT liability?

I have no idea what you mean by "rental relief"?
Do you mean letting relief? That was abolished years ago.

ianpalmer2007

Sorry, I meant Private Residence Relief as it was my main residence for 10 years before I met and married my wife and we decided to rent it out as I moved into her property. Is that relief still available as I thought it was.

Bookworm105

ianpalmer2007 said:

Sorry, I meant Private Residence Relief as it was my main residence for 10 years before I met and married my wife and we decided to rent it out as I moved into her property. Is that relief still available as I thought it was.

The rule on transfer of PRR depends on date of marriage and date of transfer in relation to 6 April 2020 when the rule changed (specifically the occupation requirement)
CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)

BTW, I appreciate you may be using example numbers in your OP, but the PRR calculation must be done in months (or days) not years