CGT on a transferred asset between husband and wife

by Eloise Hillman

19:07 PM, 13th April 2017
About 2 years ago

CGT on a transferred asset between husband and wife

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CGT on a transferred asset between husband and wife

I have a buy-to-let property that has been in my husband’s name since we purchased the property.

It has never been my main residence.

The asset was transferred to me in 2014 and is now solely in my name. 

If I were to sell this property, would I pay CGT from the date it was transferred into my name in 2014?

Thanks

Elouise



Comments

Tobias Nightingale

19:08 PM, 13th April 2017
About 2 years ago

From my understanding you would pay cgt from the value your husband bought it at.

Mark Alexander

19:09 PM, 13th April 2017
About 2 years ago

Hi Elouise

Transfers between spouses are exempt from CGT but do not create a new base cost.

CGT will be payable from when the property was first available for letting.

HMRC has an excellent online CGT calculator - see >>> https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/
.

Michael Barnes

21:38 PM, 14th April 2017
About 2 years ago

Reply to the comment left by "Mark Alexander" at "13/04/2017 - 19:09":

CGT will be payable from when the property was first available for letting.

I thought it was from date of purchase.

Mark Alexander

21:41 PM, 14th April 2017
About 2 years ago

Reply to the comment left by "Michael Barnes" at "14/04/2017 - 21:38":

Not if it's ever been a PPR.

We know Elouise never lived there but her husband may have.
.

Martin Wardle

21:47 PM, 14th April 2017
About 2 years ago

Whether occupied or not the gain will be based on original purchase. Value at date of transfer or date of moving in/out is not used in any part of the calculation. Increase is deemed to have arisen evenly over the full period of ownership.

Once you have a total gain you might then reduce it in occupation but based on original cost.

Robert M

15:25 PM, 16th April 2017
About 2 years ago

I hate to rain on anyone's parade here, but I think that technically the answers above may be a little simplified and follow common misperceptions. Broadly, the effect of transfers between spouses are that the done takes over the donor's base cost. However, the rule is that the transfer is deemed to take place for a consideration that gives rise to neither a gain nor a loss. As I understand it, this means that a computation should be prepared and all reliefs claimed, and the deemed proceeds adjusted so that no gain or loss arises. This is the stage that the donor should establish any reliefs that they have, which will increase the deemed cost for which the donee acquires the asset. I am not convinced that strictly speaking a donee can subsequently claim a donor's reliefs. I would also point out that a gift between spouses is a disposal. I would argue that strictly it should be declared on the donee's tax return and the relief be clearly established at that time and claimed. It strikes me that many taxpayers are too casual about spouse transfers and in effect are submitting incomplete tax returns. Picking up ideas from a forum like this is fine, assuming it gives all the answers is not.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22200

Mark Alexander

16:12 PM, 16th April 2017
About 2 years ago

Reply to the comment left by "Robert " at "16/04/2017 - 15:25":

I agree.

That's what I said at 19:09 on the 13th.
.

Martin Wardle

0:05 AM, 17th April 2017
About 2 years ago

Agree with Robert in never taking advice from a forum.

Disagree a valuation can be used unless owned before March 1982 or if non resident and only taxing gain after rules changed.

Straight from pretty much page 1 of the guides...

"if you have not always lived in your home, other than allowed periods of absence, multiply the total gain by a fraction equal to the period you actually lived in the dwelling house plus any allowed periods of absence plus any part of the final 18 months not covered by actual occupation or allowed period of absence, divided by the period of ownership – that part of the gain will be exempt"

In other words the gain arises straight line (ignores peaks and troughs over ownership).

Only other time a valuation on letting commencing is relevant that I can think of is for when it is first let and determining allowable financing costs on a remortgage.

Martin Wardle

0:11 AM, 17th April 2017
About 2 years ago

Reply to the comment left by "Robert " at "16/04/2017 - 15:25":

Agree about transfer of reliefs.

If transferred to joint and still used a PPR a spouse can inherit past occupation but not in point here so whether Mr had relief or not is not relevant.

Mark Alexander

0:22 AM, 17th April 2017
About 2 years ago

Just suppose the transfer was Court ordered as part of a divorce settlement after having been the husbands home prior to being let by him and subsequently transferred as a let property. Two variations, 1) within a year of separation and the other after the year of separation. The latter would require a valuation would it not?
.

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