Reader Q: Is it true that i’ll have to pay tax on the sale of my old flat because i’m now married?
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.
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
Looking for a financial adviser near you?
Do you need financial advice? An independent financial adviser can show you how to make the most of your money.
Simply find your nearest qualified and regulated adviser using the UK’s largest adviser search.