Changing percentage of ownership of BTL - too late?

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    Changing percentage of ownership of BTL - too late?

    Good evening - the time has come to sell my BTL property - my wife and I used to live in it and currently she 'owns' 99% of it and i own 1% of it. With the loss of the lettings relief I'm thinking I could reduce my CGT by changing it back to 50/50 so that I can maximise my personal allowance and private residence relief - my question is - have I missed the boat? Is it to late to change it now that I am selling?

    #2
    Nope, you can change it anytime.
    How will depend on how you set it it 99:1
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      But your overall PRR will not be any different - so your only advantage is in the extra CGT allowance (and if it will stop one of you from becoming a higher rate taxpayer).


      Comment


        #4
        Ah ok - I used to be much more up to speed with it all but have taken my eye off the ball somewhat.........so PRR is split in the same percentage as ownership? For some reason I had got it into my head that each of us could claim the total amount!

        Comment


          #5
          There is no total amount (and even less so than before) apart from the main CGT exemption. PPR (+ an added 9 months under some circumstances) just reduces the taxable gain by the proportion of the PPR period.

          Simplistic example

          House owned by person A alone
          Raw gain (sale-purchase costs) = 100K
          Lived there 50% of the time
          Taxable gain 100-(0.5*100) = 50

          House owned by person A and B in equal share
          Raw gain (sale-purchase costs) = 100K
          Lived there 50% of the time
          Taxable gain A = 50-(0.5*50) = 25
          Taxable gain B = 50-(0.5*50) = 25

          Lettings relief is no longer in existence for most people.

          Comment


            #6
            Got it - thankyou for taking the time to respond, much appreciated :-)

            Comment


              #7
              For calculating the total capital gain = Sale Proceeds minus Buying Costs minus Improvements Costs ..

              For taxable Capital Gain , the total capital gain is multiplied by rental period.( less 9 months) divided by total period of ownership.

              The taxable gain is apportion between W : 99% and H:1%

              If you wish to change back to 50 : 50 or to another ratio , you must cancel the current DOT by preparing a new DOT and send a form 17 to Tax Office within 60 days of signing. This procedure must be completed before the exchange of sale contract date.

              Comment


                #8
                And that's ok with HMRC? That would allow me to use all of my personal tax allowance which would of course be of some assistance in reducing the overall CGT? It was exactly this option that I was considering!

                Comment


                  #9
                  Yes , its OK with HMRC, which accepts Form 17 for notifying a change of beneficial interest.

                  https://www.gov.uk/government/public...-and-income-17


                  If you are on say, 40% tax band and wife is on say, 20% tax band, then your CGT may be charged at 28% and wife at 18%. So you have to decide what is the best ratio if 50: 50 does not give lowest tax bill.

                  Comment


                    #10
                    Originally posted by Gordon999 View Post
                    Yes , its OK with HMRC, which accepts Form 17 for notifying a change of beneficial interest.

                    https://www.gov.uk/government/public...-and-income-17


                    If you are on say, 40% tax band and wife is on say, 20% tax band, then your CGT may be charged at 28% and wife at 18%. So you have to decide what is the best ratio if 50: 50 does not give lowest tax bill.
                    As you say my wife is a lower tax band albeit the gain is pretty reasonable so some will be at 18% for her and the remainder will take her into the higher rate and will be taxed at at 28%.

                    I am just under the higher tax band so again a small amount will be at 18% and the remained at 28% - there is a small benefit to be realised here if I change the % of ownership ie the difference between my income and the amount that takes me into the higher band.- in addition I would also be able to use my personal allowance so for the sake of a new DoT and the form 17 it would be far more tax efficient way to dispose of my property.

                    My main concern was whether having had a 99/1 split for several years the HMRC would have an issue with me changing it to 50/50 a few weeks / months before disposal?

                    Comment


                      #11
                      The procedure for using Form 17 only applies to notifying changes of beneficial interest between husband and wife. This procedure is allowed because it is posted on the gov.uk website.

                      Your choice is stay at 99/1 or make the change to 50 50.

                      After posting the form 17, you can allow 4 weeks and call the Tax Office hotline to check if the new Form 17 details is on your tax file.

                      Comment

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