If you are getting married and you each have separate properties you may want to consider the tax implications.
The Background
‘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.
There are some qualifying conditions but ‘generally, if you have lived in your home and it has been your only home all the time that you owned it, you will not have to pay Capital Gains Tax on any money you make when you sell it’.
The problem
One key thing to note is that ‘if you are married or in a civil partnership and have two or more homes, both you and your spouse or civil partner can only nominate one principal residence for Private Residence Relief purposes - and it has to be the same one’.
However, unmarried couples do not have to have the same residence for Private Residence Relief!
So if you and your future husband/wife both own and live in your own properties you will not face a CGT bill when you come to sell your respective properties. However, once you marry you jointly have to nominate a single property as your principal residence for Private Residence Relief.
Consequently if you were to sell the properties after you are married you could face a CGT bill on at least part of the profits from any property which is not your (married) principal residence.
The solution
- Don’t get married (which I say tongue on cheek)
- Or sell your property(s) before you get married, or within years of getting married (for more information click here).
The Sunday Express published an article at the weekend suggesting that Ed Milliband was following at least one of these courses of action.
Book a free financial review
Looking to ensure your finances are on track? Our partner Unbiased will arrange for a qualified, FCA-regulated adviser to contact you
- Discuss your financial situation
- Identify what steps, if any, you should take
- Free and without obligation
