Inheritance tax and civil partners

catmoney

My long term partner & I are considering a Civil Partnership to protect each other from inheritance tax. The problem is we do not live together so have 2 houses. We know we would need to nominate one of the houses as our "main residence" for IHT but would that mean that the other is treated as a "second home" and subject to other issues such as higher Council Tax?

Thanks

Catmoney

Mark_d

That's an interesting question.  From my initial reading of the rules, your main residence can be different from your partner's main residence for inheritance tax purposes.  But I wouldn't say I'm an expert in this area

Keep_pedalling

You don’t need to nominate your home for IHT. Do either of you have children? What are the current values of the 2 homes?

p00hsticks

Your concern would relate to Capital Gains Tax.  
As I understand it, HMRC treats married couples / civil partnerships as a single entity for Capital Gains Tax purposes and they can only have one 'main residence' between them for the purposes of Principle Property Relief (PPR).  Any additional properties will potentially be liable for Capital Gains Tax when you come to sell them. 

lincroft1710

For CT purposes unmarried cohabiting couples are considered the same as married couples, so joint and several liability would apply and having 2 homes any extra CT liability would apply to the 2nd home.


However as you are not cohabiting I think you would still be considered as 2 individuals with their own homes.