Capital Gains - exchanged contracts May, getting married in August

Aug 03, 2005 8 Replies
R

Hi,



Myself and a friend own a house which we are selling.



Exchange of contracts took place in May, and completion is due 8 August.



My friend is getting married on 20 August.



He has asked if myself and the buyer would mind delaying completion until 22 August so that he can use his new wifes CGT allowance against the proceeds of the sale.



I have suggested that, AFAIK, the relevant date for Capital Gains Tax is exchange of contracts, thus changing the completion date will have no effect on the tax due. I'm pretty sure that I am right about this.



However, I am wondering if, even though the "sale" took place in May, does the fact that he is married at the end of the tax year, (April 06), mean that his wifes' allowance can be used on Capital Gains which have arisen during the whole year, and not merely since the date they married.



Any help appreciated



Regds


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E

I would suggest that the 'gain' is only made when the property is actually sold ie. on completion. Many things could go wrong between exchange and completion. I do not see how getting married will affect anything. If she is not a party to the property being sold then surely her capital gains allowance is of no relevance in the sale. Eric

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J

He could transfer ownership to her first surely?

Jim.

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D

That is correct - unless it is a conditional sale.

But she was not an owner of the property when contracts were exchanged, so it would matter whether they were married or not.

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D

That would have been OK, if they were married before exchange of contracts.

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T

"Richard Faulkner" wrote

Will the benefit be spread amongst the three of you? ;-)

"Richard Faulkner" wrote

Why not exchange *new* contracts on 21 August (with completion 22 August), cancelling the old ones?

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R

If he gives her half the house BEFORE they get married then the gift is potentially liable to inheritence tax if he dies within 7 years.

Robert

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T

But it will also create a CGT charge on him, based upoin the value at date of transfer, which is exactly what he is trying to avoid.

tim

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J

Getting married isn't enough to use a second annual exemption. The husband would have to transfer half the interest in the property to his wife before the sale takes place.

Such a transfer can't take place until after the marriage takes place, otherwise it would be a chargeable event for CGT purposes.

There may be stamp duty implications in such a transfer, and this might cost more than the CGT savings.

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