Excuse my recollection but a conversation with a client today has jolted it back into action....!
One of my clients has today informed me they are selling their main house (owned and lived in since 1990) and will be moving in to the house that the wife has owned and rented out since 2000 - this will be genuine occupation - no tricks!
She purchased it in 2000 for 150k, now worth £350k.
On a recent course a CGT refresher course (in June 2013 with a well known lecturer) the lecturer alluded to the above type of scenario and stated that - if memory serves me correct - that if the property is gifted by the wife to the husband PRIOR to occupation her gain will be interspousal and so exempt, but his gain (if he sells in say 5 years) will attract no CGT tax charge on disposal as the property will have been his PPR for the whole period of his ownership.
Am I missing something - I think not. I think the gain will be exempt when he subsequently sells The illustration from the notes stated that (amended in some areas to avoid copyright issues) - Thoughts......
Mr and Mrs X have been living in Street A for many years but intend to move to Street B 10 years’ time when he retires.
While they are still in Street A, Mr and Mrs X arrange to buy a house in Street B in their joint names which they intend to let out prior to their retirement.
Following their retirement, any subsequent sale of the house in Street B is likely to precipitate a CGT charge for each spouse, given that, for the 10 years prior to their retirement, the property had not been either spouse’s sole or main residence.
One option is for Mr X to purchase the house in his own name and let the property out as planned. Shortly before retiring and moving to Street B, Mr X transfers his entire interest in the property to his wife.
This transaction is deemed to take place at the date of the transfer and is done on the normal no gain no loss basis. And their is no backdating because at the time of the transfer, the house in Street B was not the couple’s sole or main residence. On any future sale by Mrs X, the entire capital gain is exempt because the house qualifies as the wife’s sole or main residence throughout her period of ownership (Mr Xs period of ownership, when the property was let, is irrelevant).