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H & W transfers of property - PRR query

Can I just check that this was NOT to their benefit please?

Didn't find your answer?

Betty (a Brit) solely owned and lived in a London flat upto 2004, then moved to live and work in Australia. Betty rents out her UK flat. Whilst in Oz she meets her husband-to-be (Bobby, also a Brit living and working in Oz) and they marry. They return to the UK together in Dec 2017, and rent out a property in which they live (subsequently buy and move into a house). Betty's London flat continues to be let out, and is transferred by Betty into 50:50 beneficial ownership between herself and Bobby in May 2018. In May 2019, Bobby then transfers back to Betty, such that they are left with 99:1 in Betty's favour, so almost where they were before the first transfer.

Trying to get my head around the potential CGT effects of these transfers. As they were all effected pre-6 April 2020 then the new rules will not operate. So, as they were not occupying the flat on both transfers then S222(7) TCGA1992 will not apply in each case. The first transfer of 50% to Bobby appears to have been a bad move because his ownership for PRR purposes starts at a time when he wasn't in residence and so no PRR will be applicable in respect of his share of any gain on sale (assuming they do not occupy). Is this correct? I am also trying to get my head around the effect of the subsequent transfer back to Betty, in that Betty will not be standing in the shoes of Bobby. Does this mean that her acquisition of the 49% share back from Bobby will be treated as acquired on the date of transfer and, again, no PRR will accrue to her on that share insofar as they do not take up residence (so she's lost PRR for her initial period of occupation on 49% of any gain)? If this is so, any workarounds?

Thanks.

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By Matrix
20th Sep 2021 15:10

I agree that Bobby does not inherit her PPR history but the property isn’t split for Betty. Since it has been her PPR at some point then wouldn’t this exemption apply on a time apportionment basis to her share of any gain on disposal?

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By Software Seeker
21st Sep 2021 13:10

Thanks for your reply. I was just working through Betty's ownership trail and thought that the history of the 49% which she received back from Bobby was effectively reset when she first transferred the 50% to him, and so she can no longer look back beyond Bobby's acquisition with regards to that 49%.

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By Matrix
21st Sep 2021 14:02

That is not my reading of s222(1)(a).

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By Software Seeker
27th Sep 2021 15:34

Thanks for your input - much appreciated.

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By NotAnAccountant2
20th Sep 2021 15:17

I've always wondered in this circumstance whether Betty now giving her husband an extra 1% will then get him her PPR for his entire period of ownership.

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