Private Letting relief??...

[chriscostello]

Both my wife and I have poperties, in my case more as a business and hers more as in the house she bought and then we both lived in for a while.

Now my question stems from my Wife makes a profit on her house and i have a lot of residual losses on my portfolio which contnue to ofset any current profits.

So the plan is to transfer the ownership into both our names.

From an income tax point of view this would make sence to go 99% in my name, as I don't pay tax on rent due to the lossese previously made.

But, what about private letting releif when we sell? If it is in joint names do we both qualify for the relief? i.e. 2x£40k? in which case it is proably better to go 50/50 to maximise this releif?

Thanks,

Chris.

[TaxationPete]

Not at all clear. Where do you both live now. Who is renting what out, you say y'your wife bought, so you were not an owner when you lived there. What is the nature of the business and the business property. Also please seperate revenue profit and loss, from capital profit and loss. Regards Peter

[TaxationPete]

Further, It appears that you did not live in the wife's property as an owner so it was not your PPR so LR does not apply to you even if she transferred 99% to you, your 99% would not attract PPR or any LR and your wife's relief's would be very limited on the small percentage she would own. Such a move may be very expensive. Regards Peter

[Telometer]

But she could transfer 1% to you, but 99% of the income...

[TaxationPete]

They are married so any declartion would have to have that same apportionment declared on the form 17 to HMRC, so beneficially own 1% and recieve 1% of the income. Regards Peter

[chriscostello]

thanks for replys so far...

Date Value Taxable Gain Comment
14 June 2001 136,000 Wife bought house
18 February 2005 210,007 I move in
03 November 2005 224,203 we both move out
03 November 2008 284,510 PPR runs out
10 August 2010 320,000 35,490
10 August 2011 336,000 51,490
09 August 2012 352,800 68,290
09 August 2013 370,440 85,930
10 August 2014 388,962 104,452
10 August 2015 408,410 123,901

the house generates about 8k a year profit.

So from an income point of view, transfering it to me seems sensible to minimise tax.

but for capital gain, assuming we don't sell for a few years yet, to maximise private letting relief it would seem best to be 50/50?

[jeffrey]

If it's mortgaged, even a non-sale ('Gift') Transfer might trigger SDLT.
This depends on property value, mortgage debt outstanding, and proportion transferred.

[Telometer]

Transferring it to you will increase tax on disposal as it will never have been your PPR.

But you are - indeed - married so can transfer beneficial ownership of 99% of it to you for income purposes, and transfer 99% back before sale so as to benefit from the W's entitlement PPR.

[TaxationPete]

You need to tell us your wife's gross annual income and answers to the question I put to you. You assumption of best to own 50/50 is most probably wrong. Tell us More. Regards Peter

[TaxationPete]

To leave the property in your wife's name and sell as you decribe would incure CGT of 20,042 ish. If you now owned it 50,500 then your wife's cgt would be £2,733 but yours would be in excess of £35,000 a total over £15,000 due to loss of PPR on your share and Letting relief. You need to understand the interation and the loss of relief's when you have not lived there as an owner. Start with HS283 on the HMRC web site and read on from there. Regards Peter