Getting married but both own a house

flowerpowerlady

We're getting married next year but we each own a house separately. My partners house is currently being let out, and we live in mine.

Going forward the plan is for he and a family member to jointly own his house and for the other family member to live in it, therefore making it residential rather than BTL.

Before we go ahead with all this, we want to understand what the legal implications are of owning the two houses as a married couple. Presumably as the houses were purchased well before marriage we wouldn't be subject to pay additional SDLT would we?

At some point down the line we hope that the family member is able to buy out my partner. I think at that point we're then liable for CGT as a joint entity.

My point is, if we get married are we then suddenly going to be penalised for owning 2 houses between us?

saajan_12

flowerpowerlady said:

We're getting married next year but we each own a house separately. My partners house is currently being let out, and we live in mine.

Going forward the plan is for he and a family member to jointly own his house and for the other family member to live in it, therefore making it residential rather than BTL.

Before we go ahead with all this, we want to understand what the legal implications are of owning the two houses as a married couple. Presumably as the houses were purchased well before marriage we wouldn't be subject to pay additional SDLT would we?

No, SDLT is at the point of purchase, nothing to pay upon marriage.
- If you subsequently move and replace your main home then it'll be within the exception so only standard SDLT. 
- If you subsequently replace the other property ie sell partner's property and buy another BTL (regardless of whether that's a BTL or lived in by the brother) then that purcahse will be subject to higher rate SDLT.
- If you subsequently buy an additional property ie 3 between you then that'll be at higher rate SDLT. 

flowerpowerlady said:

At some point down the line we hope that the family member is able to buy out my partner. I think at that point we're then liable for CGT as a joint entity.

My point is, if we get married are we then suddenly going to be penalised for owning 2 houses between us?

If partner sells 50% of the property to brother then partner will owe CGT on that 50% share. It'll be calculated based on the original purchase price vs the value when he sells it to brother (given brother is a connected person). If partner lived there in the past before movign in with you, then he'd claim Private Residence Relief for for the % of time he lived there plus the last 9 months. 

CGT is per person not per couple, ie based on his allowance and his tax rates. The only factor is that as a couple you can usually only have one main residence so partner couldn't say he's living in his property while you live in yours while you're married. 

Bookworm225

flowerpowerlady said:

We're getting married next year but we each own a house separately. My partners house is currently being let out, and we live in mine.

Going forward the plan is for he and a family member to jointly own his house and for the other family member to live in it, therefore making it residential rather than BTL.

Before we go ahead with all this, we want to understand what the legal implications are of owning the two houses as a married couple. Presumably as the houses were purchased well before marriage we wouldn't be subject to pay additional SDLT would we?

At some point down the line we hope that the family member is able to buy out my partner. I think at that point we're then liable for CGT as a joint entity.

My point is, if we get married are we then suddenly going to be penalised for owning 2 houses between us?

so are you suggesting that upon marriage the ownership of each property will be transferred from respective sole ownership to joint ownership?

that is an action that must be done after marriage otherwise you will not benefit from the no gain no loss rule 

as his property is currently let and you have never lived in it whilst a co-owner of it, making you a joint owner may be counter productive as you will not inherit has private residence relief so the CGT bill for the pair of you may be larger than retaining sole ownership for him. You need to crunch the numbers comparing 2 lots of CGT allowance against the lost PRR

for SDLT purposes the higher rate will apply because..
he is acquiring a share in a property that is not replacing his main home as he has no existing legal interest in that property so is not adding to an existing interest, he is adding a new property to his property empire.

for her the situation is the same, she has no existing interest in the BTL, is not selling her existing home so the replacement exemption is irrelevant and thus she is acquiring an additional property 

flowerpowerlady

Bookworm225 said:

flowerpowerlady said:

We're getting married next year but we each own a house separately. My partners house is currently being let out, and we live in mine.

Going forward the plan is for he and a family member to jointly own his house and for the other family member to live in it, therefore making it residential rather than BTL.

Before we go ahead with all this, we want to understand what the legal implications are of owning the two houses as a married couple. Presumably as the houses were purchased well before marriage we wouldn't be subject to pay additional SDLT would we?

At some point down the line we hope that the family member is able to buy out my partner. I think at that point we're then liable for CGT as a joint entity.

My point is, if we get married are we then suddenly going to be penalised for owning 2 houses between us?

so are you suggesting that upon marriage the ownership of each property will be transferred from respective sole ownership to joint ownership?

that is an action that must be done after marriage otherwise you will not benefit from the no gain no loss rule 

as his property is currently let and you have never lived in it whilst a co-owner of it, making you a joint owner may be counter productive as you will not inherit has private residence relief so the CGT bill for the pair of you may be larger than retaining sole ownership for him. You need to crunch the numbers comparing 2 lots of CGT allowance against the lost PRR

for SDLT purposes the higher rate will apply because..
he is acquiring a share in a property that is not replacing his main home as he has no existing legal interest in that property so is not adding to an existing interest, he is adding a new property to his property empire.

for her the situation is the same, she has no existing interest in the BTL, is not selling her existing home so the replacement exemption is irrelevant and thus she is acquiring an additional property 

Hi Bookworm,

No, we're not planning to jointly own them. As far as we're concerned we both just own our individual properties. One owned by me that we live in. One owned by him that he rents out. I just wanted clarification if HMRC etc still see it like that once we're married or whether we need to declare anything.

Once the family member buys into the rented property then it's no longer a rental but it still won't be my husbands main residence anyway.