PPR relief on transfer of property to wife - USERNAME: CogAcc - 23/10/2012
Tax Question:
Hi
I have a question regarding PPR and CGT.
The scenario is a client has owned a property for 16 years. He lived in the property for only 3 of those years and has rented it for the rest. So there is obviously PPR for those 3 years plus the final 3 years. On top of this there is a Private Letting claim.
He got married a few years ago and wishes to transfer 50% of the ownership to his wife.
He has asked for a potential CGT calculation. This is fine just for him as owner.
But what about his wife. If they sell it and they are both owners then the gain will get split between them, but does she qualify for any PPR relief and Private Letting Relief given that she never actually occupied the property only her husband.
Answer:
Good question.
You can extend the period of ownership for PPR relief purposes so that the wife is treated as acquiring the property at the date of purchase by the husband. Additionally she is treated as occupying it for any period the husband occupied it.
However for this extended period to apply HMRC state that the following conditions must be satisfied:
- The husband and wife or the civil partners must be living together, as defined by ITA07/S1011, and
- the residence must be their only or main residence at the date of the transfer.
If it's not their main residence then the extended period should not apply and PPR relief wouldn't apply to the wife.
In this book we look at a variety of tax planning strategies that arise from the terms of the UK's double tax treaties. This book is updated for the 2022 changes....keep reading
For many people the family home is the most valuable asset they have. As such protecting its value will be of key importance. In this tax guide we look at the key tax planning opportunities for the family home and private residences....keep reading
This brand new (December 2022) edition of our best selling offshore tax planning book tells you what you need to know to take advantage of offshore opportunities and slash your UK tax bill. It's a pretty comprehensive look at plenty of UK and offshore tax planning techniques including residence, domicile, emigration, using offshore companies and trusts, buying property overseas and much more....keep reading
Inheritance tax is a particularly nasty tax as it's a tax on your capital that you've accumulated from your after tax earnings. In this book we look at some of the top ways you can legally reduce your inheritance tax liability....keep reading
This book looks at a number of tax planning issues for company owners and considers both corporate and personal tax planning opportunities available. It is updated for the latest changes for 2022/2023....keep reading
Buy-To-Let ("BTL") landlords have to consider Income Tax, Capital Gains Tax, Inheritance Tax and Stamp Duty Land Tax on their property holdings. In this book we look at tax planning techniques that all BTL landlords can consider to reduce the amount of these taxes they pay....keep reading
This guide is essential reading for anyone providing digital or online supplies of goods and services. It looks at the international tax treatment from both an income tax/corporate perspective as well as VAT/GST....keep reading
The aim of this guide is to give context to the considerations for 99% of international tax planning scenarios. Without understanding the information contained here, you will find it very difficult to apply or structure any kind of tax planning to your international transactions/assets....keep reading
About the Author
The Author of this article/answer is our site Editor, Lee Hadnum. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.
=============================================================
Disclaimer
=============================================================i) Please note that the articles/answers contain general guidance only and do not constitute accountancy, tax, investment or other professional advice.
ii) The contents of this article/answer are for information only and are intended to assist readers in identify any tax planning opportunities that may be available to them. The information contained in this answer is not intended to be a substitute for taking proper taxation advice and should not be relied upon in this way. Always consult a qualified accountant or taxation adviser. Your situation will then be looked at individually and specific advice relevant to your circumstances can be given. The Expert does not accept responsibility for any loss arising as a result of reliance on any information contained in this answer.
These Notes (and Disclaimer) do not affect your statutory rights in the United Kingdom.