UK Tax Questions? Ask a UK Tax Advisor for answers ASAP
Hi Its MamaTax Here!
Thanks for the question.
Are the properties jointly owned?
As you may be aware married couples and civil partners are required to must choose one property as main residence. Unmarried partners can each nominate a different home as their main home to get tax relief on both. If you dont then HMRC will decide this for you taking into account factors as were you normally stay , postal address etc
Thanks for the reply.
For tax purposes the definition of living together for main residence relief is as shown below:
"You and your spouse or civil partner are treated as living together for tax purposes unless:• you are separated under a court order, or• you are separated by a formal Deed of Separation executed under seal(in Scotland a deed should be witnessed), or• you are separated in such circumstances that the separation is likely tobe permanent.If the marriage or civil partnership has not broken down but the two of you do not live in the same house, you are still treated as living together for Capital Gains Tax purposes.
Hence whichever property you nominate you will get full main residence if one of you has been living there.
However you might want to take advantage of capital gains allowance on the properties that you each separately own in the case of future sale by transferring ownership to the spouse - there is no cgt on such transfers between married people.
Husbands and wives or civil partners each have their own CGT allowance (£10,600 in 2012-13, £10,900 in 2013-14). By transferring an asset into your joint names, you can both make use of your tax-free allowance so that up to £21,200 of any gain can be tax-free in 2012-13, £21,800 in 2013-14. But the transfer to your spouse or partner must be a genuine outright gift.
Therefore to sum up, if i were you, i would:- transfer owership on all properties so that both of you own the properties jointly. No legal documents need changing but a simple Declaration of Trust/Document to say you both jointly own the property.-Nominate a property as main residence. There is a 2 year limit but there is no harm in doing that before you decide to sell the property and get HMRC approval. If this is the case then there is no cgt on this property if either of you have been living in this property-Once you buy the new property nominate the new property as new main residence or whichever property that you will be living in.
The key point is that both of you can only have one main residence at any point in time.
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