Second-guessing upcoming CGT changes

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    Second-guessing upcoming CGT changes

    Myself and my wife lived in our old home for 10 years, then let it out for 5 having carefully calculated that we could let for a good 10 years before CG liability kicked in. Unfortunately due to the April 2020 rule changes we decided to sell before that time.

    I am a higher-rate tax payer, my wife has only the rent (via form 17 declaration) as income which usually doesn't take her over her allowance with expenses taken into account.

    As things stand, we're due a modest few £1000s on a gain of approximately £150k depending on exactly how much we sell for when allowances, costs and PRR are taken into account, but I'm pretty sure that will change in November.

    Even if we find a buyer now a sale isn't going to go through by the autumn budget. But we could transfer my share into my wife's name making her sole owner, lose my allowance but end up with her salary for CG calculations, that transfer should only take some weeks, and I'm wondering if that's a crazy thing to do.

    I'm also wondering what are the CG implications of this inter-spouse transfer when my wife sells (based on current law)? The calculations here are already complicated for the PRR, I can't find any worked examples of exactly this situation where you are getting PRR, but then transfer prior to selling.

    The other question is, can this be classed as tax avoidance, even if we don't know what tax law we are trying to avoid?

    You have owned the property for 15 years including living for 10 years as your home. . So you can claim 10 years + 9 Months main residence.

    The capital gain over 15 years is about £150K and 10 years + 9 Months period is exempt for cgt.

    So 4 years and 3 months period is liable for cgt.and corresponds to capital gain = £42.5K .

    If the property is registered in both names, the capital gain reported by each person is 50% = £21 .25 K.

    There is capital gains personal allowance = £12,300 , so the taxable amount for each person is £21.25 - £12.300 = £9K approx.

    So husband pays 28% on £9k = £2,500 approx.

    and wife pays 18% on £9K = £1,620 approx


      If the property is 100% under wifes name, the taxable gain is £42,500 - £12,500 ( pers allowance ) = £30,000.

      Wife pays 18% on £30,000 = £5,100.

      But selling under joint names , husband pays £2500 and wife pays £1620 = £4,120 .

      So don't do crazy things.


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