‘My husband and I want to buy a house together. Do we have to pay extra tax when selling up?’

Linda J. Dodson

Every week, The Telegraph’s Property Doctors bring expertise on renovations and DIY, planning, buying and selling, lettings, legal issues and taxes. Send your questions to [email protected]

Q My husband and I got married last August. Both of us own our own properties (two flats in London bought in 2013) and I also own a second flat (in Cardiff, bought 2009). We are currently living in my husband’s flat, with both of my properties rented out.

This year we would like to sell the two London flats in order to buy a house. Am I right in thinking that there is an 18 month period after marriage where capital gains tax doesn’t apply? If I am able to sell my London flat within this timeframe (I haven’t been able to before now because of the property being rented) then will we be exempt of CGT?

I am also not very clear on whether, because of the Cardiff flat, we would have to pay a higher rate stamp duty? If I were to sell the Cardiff flat as well, would this mean lower rate stamp duty? But does selling both flats in the same tax year leave me with a CGT bill?

IT, London   

A After marriage or civil partnership, spouses/civil partners can transfer assets between each other without any CGT implications. This treatment applies throughout the marriage or civil partnership.  

When selling a property, provided you have lived there for the whole time you own it, the gain is exempt from CGT. There are some exceptions where periods during which you have not lived there can also qualify for relief, including the final nine months of ownership (this used to be the last 18 months before 5 April 2020).

If your husband’s flat has been his main residence throughout his ownership period, any gain on sale should be fully exempt from CGT. 

If your London flat has previously been your main home at some point, part of any gain should qualify for relief, including the last nine months. If you decided to put the flat into joint names, you would each be taxed on 50pc of the gain, with each of your annual exemptions available to reduce the taxable gain. Any main residence relief you are entitled to would also reduce your husband’s share of the gain.   

As the new house would replace your main residence (i.e. your husband’s flat) the Stamp Duty Land Tax surcharge should not apply even if you keep the Cardiff flat. If your husband’s flat hasn’t been sold by the time you purchase the new house however, you will have to pay the surcharge but it can be reclaimed provided your husband’s flat is sold within three years (possibly after three years if the flat sale is delayed due to exceptional circumstances).  

Stefanie Tremain is a private client adviser specialising in UK tax at accountancy firm Blick Rothenberg

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