- The PPR exempt amount (referred to above)
- The gain attributable to the period where it was not a PPR
- The relief available here is quite generous and can, in certain circumstances, reduce the calculated gain to nil.
My wife and I own our own properties where we lived before our marriage. We have bought a third property which we are going to live in together and we plan to rent out the other two properties. We have been advised that to simplify our tax affairs, should we transfer the original properties into joint names allowing us to benefit from two annual exemptions on any future property sales? There are several aspects to be considered in relation to this scenario. The Initial transfer of the properties from sole ownership into joint names between married couples is a “No Gain/No Loss” transaction and will not give rise to a CGT charge at that point. The rental profits/losses will automatically be split 50:50 between the two individuals. If the actual underlying ownership of the properties following the transfer is not, in fact, 50:50 then it will be possible for the couple to complete Form 17 (available from the HMRC website) which will allow them to split the rental profits/loss on an actual ownership basis rather than the automatic basis. The Form 17 route is only available to married couples and those in civil partnerships. As the question poses, the couple will be able to benefit from the application of two annual exemptions (currently 2 x £10,600 in 2012/13). However, could there have been further benefits to the couple if the properties remained in single ownership? As the properties were used as each individual’s principle private residence (“PPR”), the original owners gain attributable to the period of ownership will be exempt from CGT – calculated on a months of ownership basis - along with the final 36 months. This alone could substantially reduce any chargeable gain arising. Assuming the properties have been rented out for the full period following the move to the matrimonial home, then they could also benefit from lettings relief detailed in section 223(4) TCGA1992. This allows a further exemption from CGT for the lower of: