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Marriage and Capital Gains Tax

My partner and I have decided to marry. 
We have been together for a long time but ran two households for years as we both had young children living at home and it was more convenient at the time.

We currently live in my house which is in my sole name, and will continue to do so.

The long term plan is to sell her house, which is in her sole name and still has a mortgage outstanding on it.
Currently her adult children live there having finished uni and pay a token rent, nowhere near the market rate, while they are saving to buy their own homes. There is no tenancy agreement or anything so presumably no income tax liability? All the bills etc are in my partners name and paid by her. Basically it is just the usual kids living at home situation.

As it will no longer be her main home will this create a CGT liability when it is sold?
 Are there any time limits to avoid it?
Would putting it in both our names limit the liability by giving two allowances?

Is there anything else we need to think about with marrying later in life? We're aware that our Wills will be invalidated. The content of them wouldn't be changing so can this be dealt with via a codicil or is a whole new Will required?

Comments

  • Keep_pedalling
    Keep_pedalling Posts: 19,223 Forumite
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    The cost of changing ownership is probable not worth it for the small amount of tax saving it would gave. 

    The lack of a tenancy agreement is not reverent as far as IT is concerned, if she is gets rent it is potentially taxable, but her children should be paying for the utilities and CT not her. 
  • MEM62
    MEM62 Posts: 5,112 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    WYSPECIAL said:
    There is no tenancy agreement or anything so presumably no income tax liability? 

    You presume incorrectly.  If she is receiving rent then it is subject to tax.  However, this can be offset against costs - maintenance, insurance etc.  The rules for CGT are clearly explained on the Government website.  If it has not been too long since it ceased to be her main home the liability may be minimal.     
  • MEM62 said:
    WYSPECIAL said:
    There is no tenancy agreement or anything so presumably no income tax liability? 

    You presume incorrectly.  If she is receiving rent then it is subject to tax.  However, this can be offset against costs - maintenance, insurance etc.  The rules for CGT are clearly explained on the Government website.  If it has not been too long since it ceased to be her main home the liability may be minimal.     
    Crikey. I didn't realise that. Do people who take board off their children for living at home really declare it as taxable income?
  • sheramber
    sheramber Posts: 20,891 Forumite
    Tenth Anniversary 10,000 Posts I've been Money Tipped! Name Dropper
    WYSPECIAL said:
    MEM62 said:
    WYSPECIAL said:
    There is no tenancy agreement or anything so presumably no income tax liability? 

    You presume incorrectly.  If she is receiving rent then it is subject to tax.  However, this can be offset against costs - maintenance, insurance etc.  The rules for CGT are clearly explained on the Government website.  If it has not been too long since it ceased to be her main home the liability may be minimal.     
    Crikey. I didn't realise that. Do people who take board off their children for living at home really declare it as taxable income?
    Paying board is coverung food and maybe part of the services.

    Is she feeding them ?

    Is she cleaning the house, doing their washing, or anything else that  a parent would do for a child living with them?
  • WYSPECIAL
    WYSPECIAL Posts: 707 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    edited 23 October 2024 at 11:00AM
    sheramber said:
    WYSPECIAL said:
    MEM62 said:
    WYSPECIAL said:
    There is no tenancy agreement or anything so presumably no income tax liability? 

    You presume incorrectly.  If she is receiving rent then it is subject to tax.  However, this can be offset against costs - maintenance, insurance etc.  The rules for CGT are clearly explained on the Government website.  If it has not been too long since it ceased to be her main home the liability may be minimal.     
    Crikey. I didn't realise that. Do people who take board off their children for living at home really declare it as taxable income?
    Paying board is coverung food and maybe part of the services.

    Is she feeding them ?

    Is she cleaning the house, doing their washing, or anything else that  a parent would do for a child living with them?
    They buy their own food these days but what they do pay doesn't cover the full utility bills etc, it's just a contribution towards.
    When she goes round daily to walk her dog that lives there she'll empty the washer if it needs doing but not actually do their washing.
    She arranges all maintenance, window cleaner stuff like that. They do the washing up and tidying after themselves.
    There is certainly no profit in the arrangement!

    To be honest we were more concerned at building up a CGT liability as if married she will no longer be able to claim it is her main home.

  • silvercar
    silvercar Posts: 48,625 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    WYSPECIAL said:
    MEM62 said:
    WYSPECIAL said:
    There is no tenancy agreement or anything so presumably no income tax liability? 

    You presume incorrectly.  If she is receiving rent then it is subject to tax.  However, this can be offset against costs - maintenance, insurance etc.  The rules for CGT are clearly explained on the Government website.  If it has not been too long since it ceased to be her main home the liability may be minimal.     
    Crikey. I didn't realise that. Do people who take board off their children for living at home really declare it as taxable income?
    No, board is a contribution to the running costs of the home and could include utility bills. 
    I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • silvercar
    silvercar Posts: 48,625 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    Once you marry, you are only entitled to one PPR between you, you can make an election as to which this is within 2 years of the marriage.

    Once you sell, under current rules, you would be exempt from CGT for the time it was your principal residence and the last 9 months of ownership. Calculated on a linear scale and after deducting buying and selling costs. There is also a CGT allowance of £3,000.
    I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • MEM62
    MEM62 Posts: 5,112 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    WYSPECIAL said:
    MEM62 said:
    WYSPECIAL said:
    There is no tenancy agreement or anything so presumably no income tax liability? 

    You presume incorrectly.  If she is receiving rent then it is subject to tax.  However, this can be offset against costs - maintenance, insurance etc.  The rules for CGT are clearly explained on the Government website.  If it has not been too long since it ceased to be her main home the liability may be minimal.     
    Crikey. I didn't realise that. Do people who take board off their children for living at home really declare it as taxable income?
    Taking board from your kids and renting a property are not the same thing.  They are not comparable and are not treated the same way for tax purposes.    
  • WYSPECIAL
    WYSPECIAL Posts: 707 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    silvercar said:
    Once you marry, you are only entitled to one PPR between you, you can make an election as to which this is within 2 years of the marriage.

    Once you sell, under current rules, you would be exempt from CGT for the time it was your principal residence and the last 9 months of ownership. Calculated on a linear scale and after deducting buying and selling costs. There is also a CGT allowance of £3,000.
    So she would be exempt for the ten years that it was her principal residence plus 9 months, so it would be just the time in between that would generate a liability?

    If ownership were transferred to joint names would we each get a £3,000 allowance at the time of sale?
  • silvercar
    silvercar Posts: 48,625 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    edited 27 October 2024 at 10:20PM
    WYSPECIAL said:
    silvercar said:
    Once you marry, you are only entitled to one PPR between you, you can make an election as to which this is within 2 years of the marriage.

    Once you sell, under current rules, you would be exempt from CGT for the time it was your principal residence and the last 9 months of ownership. Calculated on a linear scale and after deducting buying and selling costs. There is also a CGT allowance of £3,000.
    So she would be exempt for the ten years that it was her principal residence plus 9 months, so it would be just the time in between that would generate a liability?

    If ownership were transferred to joint names would we each get a £3,000 allowance at the time of sale?
    Yes, you would each get a £3k allowance under current rules, you acquire any PPR relief from your spouse.
    I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
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