Private Residents Relief for CGT and Deed of Assignment

Dear HMRC - I have 2 buy to let properties solely in my name and as I understand it a deed of assignment enables me to assign beneficial interest to my wife at 100% so that we can efficiently use her tax allowance as I am a higher rate tax payer. I lived in one of the properties for 5 years prior to creating the deed of assignment. Am I correct in understanding that when we sell the property I lived in that these 5 years will be exempt from my GCT liability as it was me that lived in the property prior to the deed of assignment? Many thanks, Lee

Hi
As both properties are legally and beneficially owned soley by you, the income from both properties is your taxable income.  You would need to make your wife a joint owner of the properties.  In this way, you can automatically split the income 50/50, by default.  The only other alternative is a split based on the legal ownership of the properties.

Hi - thanks for the response, but the question is more around my GCT allowance, should I create a deed of assignment do I forgo the CGT relief for the years that I lived in the property prior to the deed of assignment?

Hi Lee Ralph,
No.  
If you disposed of the property after the deed of assignment is created, you can claim private residence relief for your share of the property, for the period that the property was your main residence.
Thank you.

Hi – thanks for the response, please can we test my understanding with an example. Property purchased in April 2006 for £200,000 with a friend which I then bought out in 2008 with me remaining as the sole owner, I am a higher rate tax payer. If the property is disposed of for £300,000 in April 2026 capital gain would be £100,000. Property lived in by me as my main residence 2006-2011 (5 years) and 2013-2014 (1 year) total occupancy 6 years. It will have been rented out to tenants for the remaining 14 years. Deed of assignment will be signed April 2024 assigning 95% beneficiary ownership to my wife. Would I be able to claim CGT relief for the 6/20 years that I lived in the property? i.e. 30% of the duration? Assuming this is correct and I pay CGT at 28% on 70% of the gain (28% x £70,000 = £19,600) can I utilise both my wife’s and my CGT allowances in 2026 when we dispose of the asset (assuming this is £6,000 each using today’s rate as an example only). Therefore this liability of £19,600 would be reduced by £12,000 to £7,600? Many thanks, Lee

Hi Lee Ralph,
We cannot comment on scenarios, we can only provide general information / guidance in this forum.
For an answer to a detailed question of this nature, you would need to seek professional advice.
Thank you.