3 min Read
04 Sep 2013

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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Reader Q: Is it true that i’ll have to pay tax on the sale of my old flat because i’m now married?

Get an answer to your financial question online Reader Question:

I bought a property a few years ago in my own name. I have since got married and moved into my wife's house (which is in her name) I am now renting out my house but am looking to sell it. Can you let me know whether I will liable for CGT. we are both higher rate tax payers. I bought the house for £208k and it will probably sell for a similar value.

My response:

First of all, if a property or asset is worth the  same as you bought it then you haven't made a capital gain so you won't be subject to capital gains tax.

However, your question does raise an interesting point. If a couple are married or in a civil partnership and have two or more homes, both can only nominate one principal residence for Private Residence Relief purposes - and it has to be the same one.  ‘Private Residence Relief  is the name given to the tax relief designed to ensure that most people don't face a Capital Gains Tax (CGT) bill when they sell their home’, as stated on the Directgov website.

However, unmarried couples do not have to have the same residence for Private Residence Relief!

So if an unmarried couple owned and lived in their own properties they will not face a CGT bill when they come to sell their respective properties. However, once they marry they jointly have to nominate a single property as their principal residence for Private Residence Relief (This will be true in your case).

Consequently if they were to sell the properties after they married they could face a CGT bill on at least part of the profits from any property which is not their (married) principal residence.

I hope that helps

Best Wishes

Damien

 

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