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Could I Give Half the House to My Husband to Use Both CGT Allowances?


I bought a 2nd home in 2000 and lived there for 3 years with my disabled student child. In 2003 she wanted to try and live without me as her carer so I rented part of the house to a tenant and I returned to my marital home. I have paid income tax on the rental income but am unsure of the new rules on cgt re lettings relief if I ever sold the 2nd property. I know that taper relief has ended and that all chargeable capital is taxed at 18%, could I give half the house to my husband so we could use both cgt allowances?


James says:
A married couple can only have one "main residence" so much depends on which property was your and your husband's main residence. On the facts, it sounds as if this would be the marital home. Had you made an election within two years of purchasing the second home for it to be treated as your main residence, you could have nominated the second home, but unfortunately the two year time limit for this is strictly enforced so it is now too late. Letting relief only applies to a property that has at some stage been your "main residence" for tax purposes, so it may not be available to you on the second home. I do not really have enough information to be certain about this, and it would be worth your while to ask a tax adviser for an opinion on whether the second home could be regarded as your main residence. Giving half the property to your husband before selling it would enable him to use his annual exempt amount, but if there is a large mortgage on the property you need to consider the SDLT cost - again, ask a tax adviser.

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