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Hi,
Me and my partner have moved in together and I have sold my house. It just so happens that the amount of cash left of from selling my house is almost exactly the same as the remaining amount she has to pay on her mortgage.
Can I just give her the money to pay it off without anyone having to pay anything like Capital Gains tax? I've had a look at HMRC's website and I can't figure it out. Any ideas?
No capital gains on selling your house.
But think there will be a tax implication for monies "gifted" to partner.
Marry her and not is not a problem ... see you at the reception 🙂
If you were previously living in your house and hadn't claimed anything on it as a business expense (like costs of keeping one room as an office) then yes I think you would be free of CGT. Same as normal house sale, what you do with the cash after that is up to you.
Also CGT has a tax free limit of £10000 IIRC. Worth considering over payment and early completion clauses in the mortgage. Might be better to keep the money yourself and repay so that you don't incur charges - you'd need to do some maths to figure it out.
You can gift people money, just don't die in 7 years otherwise there is a risk of Inheritance tax.
If you are paying a significant sum you might want to get your name added to the deeds.
2 points
1. Where is the gain in investment - i can't see one.
2. If there is a gain in investment, keep it casual, it's so far from anyones books, it would never crop up anyway.
The only thing i would be concerned about is the name on the deeds of your girlfriends house, irrespective of relationship, i would not be doing this without legal cover.
If you have sold your main residence there is no CGT as you will qualify for principal private residence relief on any gain you have made.
The money that you give to your girlfriend will be a Potentially Exempt Transfer from your estate. Live seven years and it is a gift without consequence, die in that time and it will be assessable in your estate for Inheritance Tax purposes.
You should, together with your girlfriend put in place a Deed of Trust which recognises your contribution to her house purchase. If not you may never be able to recover the gift if you split or if she dies (although that may be what you want).
Finally your girlfriend needs to make/ update her Will to make clear what happens in the event of her death, if you are unmarried you cannot inherit from each other without this in place. You should do one too.
You probably want to make yourself a joint tenant - or tenant in common - on her house. I can never remember which is which, and your preference might be for either, depending on how you (both) view things. Basically, you either want to own a specific % of the house, or share full ownership and automatically get all of it if she dies irrespective of relationship or will (and vice versa). Other posters have already given correct advice regarding CGT and PETs.
good accurate advice as usual - I'd just like to add in case anyone is interested that you can gift 3k per year & it is immediately out of your estate.
Tenants in common is what my solicitor advised me.
Please get named on the house for your contribution or marry her
Which ever you deem the most suitable
Tenants in Common would be the correct form of ownership for an unmarried couple. You can specify the share of property that each owns (if you don't the default is 50/50).
You would then formally be a joint owner of the property, if that's not what you want a deed of trust referred to in my earlier post will recognise your beneficial interest without becoming a legal owner of the property.
No CGT.
Agreed tenets in common, your share should equal the mortgage. Getting named on the property is a very good idea (essential one way or another). If you do this formally you may be liable for stamp duty on your share with transaction treated as being of the total value of your share (so could be below threshold) ask a lawyer.
Get legal advice on the new property situation as others have said.
And act on it.
Having once given half my house to the woman I loved 🙄
NJA speaks wisely like a wills, trust & tax practitioner, although the final sentence in his first post - "You should do one too", makes me think of less positive comments by other members on relationship threads.
Drlex you got me. That's what I do for a living 😀
As above. Plan for the worst but hope for the best.