Unmarried couple with two properties - CGT & Council Tax queries

silvercar

Are you buying it as an investment or in order to have a joint home with your partner? If the latter, then I assume you will spend some time there, otherwise what is the point of buying?

CadburyPurple

silvercar said:

Are you buying it as an investment or in order to have a joint home with your partner? If the latter, then I assume you will spend some time there, otherwise what is the point of buying?

We want to ditch the two leasehold flats that we own, to reduce service charges and risk of leasehold property values growing far less quickly than freehold, or even depreciating. So it makes sense to buy NOW our future home (Property A) together, but for now I need to live in Property B to be near my 82 year old mother, whilst he lives in Property A.

silvercar

CadburyPurple said:

silvercar said:

Are you buying it as an investment or in order to have a joint home with your partner? If the latter, then I assume you will spend some time there, otherwise what is the point of buying?

We want to ditch the two leasehold flats that we own, to reduce service charges and risk of leasehold property values growing far less quickly than freehold, or even depreciating. So it makes sense to buy NOW our future home (Property A) together, but for now I need to live in Property B to be near my 82 year old mother, whilst he lives in Property A.

From a purely tax perspective, make B your PPR, then when you eventually sell it there will be no CGT to pay. You then both live in property A. When you sell that there may be a small CGT liability based on it not having been your PPR for all the time of ownership, but there would be some PPR. (it may even be that you could both have a civil partnership and then that would give you his PPR for the whole time of ownership.)

CadburyPurple

silvercar said:

CadburyPurple said:

silvercar said:

Are you buying it as an investment or in order to have a joint home with your partner? If the latter, then I assume you will spend some time there, otherwise what is the point of buying?

We want to ditch the two leasehold flats that we own, to reduce service charges and risk of leasehold property values growing far less quickly than freehold, or even depreciating. So it makes sense to buy NOW our future home (Property A) together, but for now I need to live in Property B to be near my 82 year old mother, whilst he lives in Property A.

From a purely tax perspective, make B your PPR, then when you eventually sell it there will be no CGT to pay. You then both live in property A. When you sell that there may be a small CGT liability based on it not having been your PPR for all the time of ownership, but there would be some PPR. (it may even be that you could both have a civil partnership and then that would give you his PPR for the whole time of ownership.)

Thank you but I'm not sure why you'd suggest this because: (a) Property B will likely remain flat-line in value so pretty pointless to protect the CGT; (b) this would mean paying double council tax on Property B: an extra £3k p/a, and another 25% of council tax on Property A as there'd be no single person discount. Civil partnership or marriage in later life for PPR benefit had not occurred to me, although we had started to think it might be sensible for IHT: but not something we want to consider in the short term. Obviously this is all in the realms of the theoretical - which is still very interesting to understand - as I will truly need to live at Property B for a number of years to support my mother.

silvercar

CadburyPurple said:

silvercar said:

CadburyPurple said:

silvercar said:

Are you buying it as an investment or in order to have a joint home with your partner? If the latter, then I assume you will spend some time there, otherwise what is the point of buying?

We want to ditch the two leasehold flats that we own, to reduce service charges and risk of leasehold property values growing far less quickly than freehold, or even depreciating. So it makes sense to buy NOW our future home (Property A) together, but for now I need to live in Property B to be near my 82 year old mother, whilst he lives in Property A.

From a purely tax perspective, make B your PPR, then when you eventually sell it there will be no CGT to pay. You then both live in property A. When you sell that there may be a small CGT liability based on it not having been your PPR for all the time of ownership, but there would be some PPR. (it may even be that you could both have a civil partnership and then that would give you his PPR for the whole time of ownership.)

Thank you but I'm not sure why you'd suggest this because: (a) Property B will likely remain flat-line in value so pretty pointless to protect the CGT; (b) this would mean paying double council tax on Property B: an extra £3k p/a, and another 25% of council tax on Property A as there'd be no single person discount. Civil partnership or marriage in later life for PPR benefit had not occurred to me, although we had started to think it might be sensible for IHT: but not something we want to consider in the short term. Obviously this is all in the realms of the theoretical - which is still very interesting to understand - as I will truly need to live at Property B for a number of years to support my mother.

Council tax and CGT/ PPR don’t follow the same rules. Council tax involves showing it is your home, clearly property A for you. PPR can be declared if you spend even some time in the property. But if you expect it to flat line it is irrelevant.

IHT is a separate topic, but marriage or civil partnerships have definite benefits.

sheramber

If property is your  PPR you will be liable for second home stamp duty on property A

xylophone

https://www.litrg.org.uk/savings-property/capital-gains-tax/selling-your-home may be worth a look.