UK Landlord Forum / Life

Hi my partner owns a house that he rents out - he bought it for us to move into together at some point - but now we are undecided whether we want to move into it or not.  He lives with me in my house which currently has a mortgage of about half the value of the property.   He is thinking of paying off the mortgage and then we own it jointly ( I know theres a better phrase for that maybe tenants in common?) we are doing this as we are coming up to retirement age and its time to start getting our ducks in a row.   Question is - we know if he sells the bungalow he will be hammered for CGT as he has owned it a while and he bought at just the right time so its gone up considerably in value.  So, what would happen in terms of CGT if we sold the house we live in now and which we will own jointly - and move in the house he currently rents out?  If we were to save considerably on CGT that may be the decider for which house we do live in. We were probably naive but are quite shocked to discover how much CGT we could be liable for !!   Many thanks in advance

The amount of CGT is pretty much already determined. CGT is calculated on the entire gain from purchase to sale less costs of purchase and sale and any significant changes to the property. When a property is you main (or only) residence, the gain is tax free for that period, plus nine months.

So the gain while the property was let out is already taxable, and, while moving in with reduce the bill slightly (the nine months), for most people that's not worth it and it would be wiped out by the costs of moving etc.

If you're not married, there's not a lot you can do to mitigate the tax.

Just to avoid confusion, there are two ways you could jointly own your home, joint tenants and tenants in common. In the former, you both own all of the house and in the latter you own a specific share of the property which is legally separate. You'd need some legal advice about which one suits you best.

many thanks for replying. would you mind clarifying something - say for example the house my partner owns and rents out was bought for 200K  and is now worth 300K .  He now also invests in my house and we become joint owners.  in a year or so time we sell the house we now own jointly - that has 40K profit after purchase and renovation.  we move into the house which he solely owns (the one which has gone up by 100K)  on which house will we pay CGT ?
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sorry for needing it clearer

I think you're missing the key principal. You pay CGT on all gain (less allowable costs) for all property transactions. Except where you can apply a relief for any period when the property was your main or only home.

Tax is an individual matter, so each of you has an individual liability.So there's no "we", each of you pays your own tax.

Your husband will pay CGT for the house he owns for all of the period he doesn't live in it as his main home. You don't own it, so it doesn't affect your tax at all.

Assuming you're not married, if you acquire some share of ownership of the property that's a disposal of part the property. So CGT is due on that part. It's different if you're married.
If you become owners as joint tenants, the part disposed of is 50% for tax purposes, if you're tenants in common it's 50% unless you declare a different split.

I'm not sure about your current home because it's not clear who owns it now (you say you will own it jointly, which implies its not owned jointly now). If one of you owns it, and that person has lived there since it was bought, there won't be any CGT.

I can understand your being shocked about the CGT, but the current rules have been in place for decades. It shouldn't surprise your partner, they were always going to pay it.

so if we move into the house he owns (and currently rents out) - he still has to pay CGT? He has to pay it if he sells it - or has to pay it if stops renting it and moves into it so there is no benefit in moving into it to live in - doesnt save any CGT?

Quote from: smfm100 on March 05, 2025, 06:41:58 PMso if we move into the house he owns (and currently rents out) - he still has to pay CGT?

Yes.

QuoteHe has to pay it if he sells it

You only pay CGT when you dispose of the property. That might not be a sale, it could happen if the property ownership changes for another reason - a gift for example.

Quoteor has to pay it if stops renting it and moves into it so there is no benefit in moving into it to live in - doesnt save any CGT?

Moving into a property doesn't trigger CGT, no. Living in the property for a period might change the amount of CGT to be paid - it might go up or down depending on how long he lives in it and what happens to property prices.