CGT and Deed of Trust

Jeremy535897

Bookworm105 said:

Jeremy535897 said:

Bookworm105 said:

ianpalmer2007 said:

Ok, thank you - so if I leave it as it is and my wife pays all the CGT - am I right in saying that she can use my Private Residence Relief - of 93/288 months on her CGT return?

No
ability to "inherit" PRR from a spouse is subject to slightly different criteria if the transfer took place before 6 April 2020

 CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)

Where the disposal between spouses or civil partners living together was made before 6 April 2020, the dwelling-house must have been their only or main residence at the time of the transfer,


if I read your timeline correctly the transfer ("disposal") took place in 2017 when you had already been living in her property as the marital main home since 2008 onwards. She was not living in the property as the marital home in 2017, so can't inherit your PRR.

on that basis your and her CGT exposure will be very different and may need to bias the beneficial ownership % towards you not her

(if you change % again "now" under the post 2020 criteria (residence in it at date of transfer not required) I have no idea if that would be treated as new disposal under the new rule - take professional advice before she claims PRR)

I confess I find CG64925 hard to follow. I can see nothing in the legislation to support a different analysis of the situation if the transfer between spouses took place before 6 April 2020, but I am probably missing something.

Whilst I accept you validly pull me up on stuff on here, in this instance, no, you are missing FA 2020

"Where the inter-spouse or civil partner disposal took place before 6 April 2020, different rules applied. This was because, prior to amendment by FA 2020, s. 24, the rules in s. 227(7)(a),(b) only applied if the dwelling-house was the only or main residence of the transferor at the time of the transfer . "

examples 2 & 3 illustrate
546-480 Special rules for transfers between spouses and civil partners | Croner-i Tax and Accounting (croneri.co.uk)

I don't deny that different rules applied before FA 2020. I just don't see that the old rule still applies. If it did, the legislation would say that "where the interspousal transfer took place prior to 6 April 2020...."

jimmo

Jeremy535897 said:

Bookworm105 said:

Jeremy535897 said:

Bookworm105 said:

ianpalmer2007 said:

Ok, thank you - so if I leave it as it is and my wife pays all the CGT - am I right in saying that she can use my Private Residence Relief - of 93/288 months on her CGT return?

No
ability to "inherit" PRR from a spouse is subject to slightly different criteria if the transfer took place before 6 April 2020

 CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)

Where the disposal between spouses or civil partners living together was made before 6 April 2020, the dwelling-house must have been their only or main residence at the time of the transfer,


if I read your timeline correctly the transfer ("disposal") took place in 2017 when you had already been living in her property as the marital main home since 2008 onwards. She was not living in the property as the marital home in 2017, so can't inherit your PRR.

on that basis your and her CGT exposure will be very different and may need to bias the beneficial ownership % towards you not her

(if you change % again "now" under the post 2020 criteria (residence in it at date of transfer not required) I have no idea if that would be treated as new disposal under the new rule - take professional advice before she claims PRR)

I confess I find CG64925 hard to follow. I can see nothing in the legislation to support a different analysis of the situation if the transfer between spouses took place before 6 April 2020, but I am probably missing something.

Whilst I accept you validly pull me up on stuff on here, in this instance, no, you are missing FA 2020

"Where the inter-spouse or civil partner disposal took place before 6 April 2020, different rules applied. This was because, prior to amendment by FA 2020, s. 24, the rules in s. 227(7)(a),(b) only applied if the dwelling-house was the only or main residence of the transferor at the time of the transfer . "

examples 2 & 3 illustrate
546-480 Special rules for transfers between spouses and civil partners | Croner-i Tax and Accounting (croneri.co.uk)

I don't deny that different rules applied before FA 2020. I just don't see that the old rule still applies. If it did, the legislation would say that "where the interspousal transfer took place prior to 6 April 2020...."

The interspousal transfer is a disposal in its own right, albeit at no gain/no loss. S58 TCGA1992.Therefore the legislation as at 2017 applies 

Jeremy535897

jimmo said:

Jeremy535897 said:

Bookworm105 said:

Jeremy535897 said:

Bookworm105 said:

ianpalmer2007 said:

Ok, thank you - so if I leave it as it is and my wife pays all the CGT - am I right in saying that she can use my Private Residence Relief - of 93/288 months on her CGT return?

No
ability to "inherit" PRR from a spouse is subject to slightly different criteria if the transfer took place before 6 April 2020

 CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)

Where the disposal between spouses or civil partners living together was made before 6 April 2020, the dwelling-house must have been their only or main residence at the time of the transfer,


if I read your timeline correctly the transfer ("disposal") took place in 2017 when you had already been living in her property as the marital main home since 2008 onwards. She was not living in the property as the marital home in 2017, so can't inherit your PRR.

on that basis your and her CGT exposure will be very different and may need to bias the beneficial ownership % towards you not her

(if you change % again "now" under the post 2020 criteria (residence in it at date of transfer not required) I have no idea if that would be treated as new disposal under the new rule - take professional advice before she claims PRR)

I confess I find CG64925 hard to follow. I can see nothing in the legislation to support a different analysis of the situation if the transfer between spouses took place before 6 April 2020, but I am probably missing something.

Whilst I accept you validly pull me up on stuff on here, in this instance, no, you are missing FA 2020

"Where the inter-spouse or civil partner disposal took place before 6 April 2020, different rules applied. This was because, prior to amendment by FA 2020, s. 24, the rules in s. 227(7)(a),(b) only applied if the dwelling-house was the only or main residence of the transferor at the time of the transfer . "

examples 2 & 3 illustrate
546-480 Special rules for transfers between spouses and civil partners | Croner-i Tax and Accounting (croneri.co.uk)

I don't deny that different rules applied before FA 2020. I just don't see that the old rule still applies. If it did, the legislation would say that "where the interspousal transfer took place prior to 6 April 2020...."

The interspousal transfer is a disposal in its own right, albeit at no gain/no loss. S58 TCGA1992.Therefore the legislation as at 2017 applies 

You may well be right, but I would be interested to see what a tribunal makes of the point. To me, the more natural reading is that the "disposal" is the one that is made at the end, but that's just my opinion.
One absurd result of the legislation appears to be that if X owns an investment property, leaves it to spouse Y, and then Y lives in it as a main residence throughout before selling it, the whole gain is not exempt even though the whole gain arises during a period during which it was Y's main residence. Had they just lived together, the whole gain would be exempt.

Bookworm105

Jeremy535897 said:

jimmo said:

Jeremy535897 said:

Bookworm105 said:

Jeremy535897 said:

Bookworm105 said:

ianpalmer2007 said:

Ok, thank you - so if I leave it as it is and my wife pays all the CGT - am I right in saying that she can use my Private Residence Relief - of 93/288 months on her CGT return?

No
ability to "inherit" PRR from a spouse is subject to slightly different criteria if the transfer took place before 6 April 2020

 CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)

Where the disposal between spouses or civil partners living together was made before 6 April 2020, the dwelling-house must have been their only or main residence at the time of the transfer,


if I read your timeline correctly the transfer ("disposal") took place in 2017 when you had already been living in her property as the marital main home since 2008 onwards. She was not living in the property as the marital home in 2017, so can't inherit your PRR.

on that basis your and her CGT exposure will be very different and may need to bias the beneficial ownership % towards you not her

(if you change % again "now" under the post 2020 criteria (residence in it at date of transfer not required) I have no idea if that would be treated as new disposal under the new rule - take professional advice before she claims PRR)

I confess I find CG64925 hard to follow. I can see nothing in the legislation to support a different analysis of the situation if the transfer between spouses took place before 6 April 2020, but I am probably missing something.

Whilst I accept you validly pull me up on stuff on here, in this instance, no, you are missing FA 2020

"Where the inter-spouse or civil partner disposal took place before 6 April 2020, different rules applied. This was because, prior to amendment by FA 2020, s. 24, the rules in s. 227(7)(a),(b) only applied if the dwelling-house was the only or main residence of the transferor at the time of the transfer . "

examples 2 & 3 illustrate
546-480 Special rules for transfers between spouses and civil partners | Croner-i Tax and Accounting (croneri.co.uk)

I don't deny that different rules applied before FA 2020. I just don't see that the old rule still applies. If it did, the legislation would say that "where the interspousal transfer took place prior to 6 April 2020...."

The interspousal transfer is a disposal in its own right, albeit at no gain/no loss. S58 TCGA1992.Therefore the legislation as at 2017 applies 

You may well be right, but I would be interested to see what a tribunal makes of the point. To me, the more natural reading is that the "disposal" is the one that is made at the end, but that's just my opinion.
One absurd result of the legislation appears to be that if X owns an investment property, leaves it to spouse Y, and then Y lives in it as a main residence throughout before selling it, the whole gain is not exempt even though the whole gain arises during a period during which it was Y's main residence. Had they just lived together, the whole gain would be exempt.

yes, one of the adverse issues, here is another discussion on it:
"When the rule change is bad"
New rules for inter-spouse transfers of main residence - Forbes Dawson

some 4 years later if there were tribunal grounds it would have been sorted by now and an awful lot of webpages would need to have been rewritten

PPR change to inter-spouse transfers: What’s new? - Tax Insider

Jeremy535897

Bookworm105 said:

Jeremy535897 said:

jimmo said:

Jeremy535897 said:

Bookworm105 said:

Jeremy535897 said:

Bookworm105 said:

ianpalmer2007 said:

Ok, thank you - so if I leave it as it is and my wife pays all the CGT - am I right in saying that she can use my Private Residence Relief - of 93/288 months on her CGT return?

No
ability to "inherit" PRR from a spouse is subject to slightly different criteria if the transfer took place before 6 April 2020

 CG64925 - Private residence relief: ownership period: spouses or civil partners and legatees - HMRC internal manual - GOV.UK (www.gov.uk)

Where the disposal between spouses or civil partners living together was made before 6 April 2020, the dwelling-house must have been their only or main residence at the time of the transfer,


if I read your timeline correctly the transfer ("disposal") took place in 2017 when you had already been living in her property as the marital main home since 2008 onwards. She was not living in the property as the marital home in 2017, so can't inherit your PRR.

on that basis your and her CGT exposure will be very different and may need to bias the beneficial ownership % towards you not her

(if you change % again "now" under the post 2020 criteria (residence in it at date of transfer not required) I have no idea if that would be treated as new disposal under the new rule - take professional advice before she claims PRR)

I confess I find CG64925 hard to follow. I can see nothing in the legislation to support a different analysis of the situation if the transfer between spouses took place before 6 April 2020, but I am probably missing something.

Whilst I accept you validly pull me up on stuff on here, in this instance, no, you are missing FA 2020

"Where the inter-spouse or civil partner disposal took place before 6 April 2020, different rules applied. This was because, prior to amendment by FA 2020, s. 24, the rules in s. 227(7)(a),(b) only applied if the dwelling-house was the only or main residence of the transferor at the time of the transfer . "

examples 2 & 3 illustrate
546-480 Special rules for transfers between spouses and civil partners | Croner-i Tax and Accounting (croneri.co.uk)

I don't deny that different rules applied before FA 2020. I just don't see that the old rule still applies. If it did, the legislation would say that "where the interspousal transfer took place prior to 6 April 2020...."

The interspousal transfer is a disposal in its own right, albeit at no gain/no loss. S58 TCGA1992.Therefore the legislation as at 2017 applies 

You may well be right, but I would be interested to see what a tribunal makes of the point. To me, the more natural reading is that the "disposal" is the one that is made at the end, but that's just my opinion.
One absurd result of the legislation appears to be that if X owns an investment property, leaves it to spouse Y, and then Y lives in it as a main residence throughout before selling it, the whole gain is not exempt even though the whole gain arises during a period during which it was Y's main residence. Had they just lived together, the whole gain would be exempt.

yes, one of the adverse issues, here is another discussion on it:
"When the rule change is bad"
New rules for inter-spouse transfers of main residence - Forbes Dawson

some 4 years later if there were tribunal grounds it would have been sorted by now and an awful lot of webpages would need to have been rewritten

PPR change to inter-spouse transfers: What’s new? - Tax Insider

Indeed. Most interesting. Not something that exactly stands out from the legislation in TCGA 1992.

Jeremy535897

I have been looking further at the legislation on this, as I appreciate that we have had a difference of opinion. I said that I found CG64925, which Bookworm 105 has quoted, hard to follow. Unfortunately the commentators on it just repeat the text rather than commenting upon it.Jimmo observed that the inter spousal transfer is itself a "disposal," and therefore the amendment only applies to disposals where the inter-spouse transfer took place after 5 April 2020.
My concern about this was that in ten years time, on a disposal, you still have to remember that the rules changed back in 2020, but I was prepared to accept that my reading was wrong.
I decided to have a closer look at the FA 2020 legislation, and I believe I found the answer in section 24(2)(b) FA2020, which says:

(b)in subsection 222(7)(a) (disposal of dwelling-house to a spouse or civil partner)—

(i)for “the dwelling-house” substitute “ a dwelling-house ”, and

(ii)omit “which is their only or main residence”,

Then section 24(10) FA 2020 says:

The amendments made by subsection (2)(b) have effect in a case where the disposal or death mentioned in subsection (7)(a) of section 222 of TCGA 1992 is made or occurs on or after 6 April 2020.

So Bookworm 105 and CG64925 are correct, and you have to look back at the old wording pre FA 2020 if the inter-spousal transfer precedes 6 April 2020.