Can anyone put me straight on a question where research tends to reveal conflicting advice and TCGA 92 is (as ever) as clear as mud!
Section 222(7) makes it "clear" that, if you put property into joint ownership with your spouse, they can only get PPR relief for earlier periods if the property is put in joint names whilst it is (present tense) their joint PPR. So far so good. If you want to do this and the property is currently being let, simply kick out the tenants, move in for a reasonable period (say a year), change your address on all official correspondence, put yourselves on the voting register and let out the old house so there is no suggestion you carried on living there.
But what about Letting Relief? Can your spouse claim this if he/she did not own the property at the time or lived there previously? Some advisors say No, but s222(7) suggests you can, for it says the donee spouse acquires the "period of ownership" of the donor spouse, and s223(4) says that letting relief can be claimed if it was let during your "period of ownership".
So what am I missing here? Why do some advisors say Letting Relief is not available in those circumstances?
Apart from Letting Relief, the only tax saving benefits are the spouse AE and a possible reduction in the proportion of the gain exposed to 28% so it is highly relevant.
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No
I assume that the situation is that the transfer was between the spouses whilst occupying the property as the main residence and the letting period was before that time.
It is then the case that the acquiring spouses period of ownership starts when the disposing spouses period of ownership starts and the periods of occupation as the main residence are inherited.
However, for lettings relief to apply, it must not only be let during the (actual and deemed) period of ownership, it must be "let by him" (section 223(4)).
The property is not deemed to have been let by the acquiring spouse, but only deemed to be owned and (where appropriate) occupied by them.
Are you writing a book? This is the second PPR question of yours that I have answered. What is my cut?
I think
If the property is gifted by H (with inherent taxable gains) to W before it becomes W's PPR, then that would eliminate all the gains on the property if W later sold it as her PPR (in case you want to add that to your book).
Surely the better option would be to transfer 100% to the other spouse whilst the property is being let; followed by a qualifying period of PPR for both spouses.
This would exempt the total period of ownership of the transferee spouse from CGT - which, in effect, means no CGT for the transferor's period of ownership also.
I read a incredibly well written article the link no longer exists
http://www.taxationweb.co.uk/tax-articles/property-taxes/main-residence-...
I told my nephew on holiday that is he gives the property to his wife whilst it is let.
The date she is deemed to won it is the date of the transfer say planned to be one month before the property stops being let.
If she moves in and takes it to be her PPR they cane avoid tax
I am no tax expert at all , was this link correct?
Oh look, the smug crowd have arrived
You know the smug people, by the way that they use hindsight as a planning tool. Terrible practice in my opinion.
However the question that the OP is asking tends to arise in the following sort of situation.
Wills is a singleton who comes from some family wealth. After he leaves uni, he buys himself a nice little 10 bedroom house in the leafy suburb of Mayfair.
He lives there three years before magically learning to fly helicopters in the army and sodding of to the middle east for a few years. He lets the house in Mayfair while he's away.
On his return, he decides to continue renting the house in Mayfair and buy himself a nice little pied a terre in Knightsbridge. Bumbling around quaint little Knightsbridge, he bumps into the lovely Kate. They fall in love... we already know this story, because we use hindsight as a planning tool.
Wills and Kate get wed and decide to move into the 10 bedroom house in Mayfair. Wills transfers half the house into Kate's name (feckin' idiot, she saw him coming), and Kate, under 222(7), because the transfer takes place while Wills and Kate occupy the property as their main residence, Kate has now magically owned her half of the house for eight years and occupied it for the first three of those years for CGT purposes, even though she did not even know Wills at the time.
However, Kate is not going to have a magic period of lettings relief, because of 223(4)'s "let by him" condition.
That was the point of the OP, as I understood it, and the smug hindsight planning does not work in that situation.
Wills and Kate
To clarify, in my previous example, any similarity of the characters to persons living or dead was entirely coincidental.