Can I sell a property to my wife to reduce CGT

Selling a property to your spouse may not necessarily help you reduce your Capital Gains Tax (CGT) liability. In the UK, HMRC has specific rules for transactions between spouses or civil partners.

When you transfer an asset to your spouse or civil partner, HMRC usually considers it a transfer between “connected persons.” As a result, the transfer is typically deemed to take place at the asset’s market value, even if you sell it for a different price.

According to HMRC’s guidance (refer to CGT Manual, sections CG22200 and CG14540), when an asset is transferred between spouses or civil partners living together, the transfer is treated as taking place at a value that gives neither a gain nor a loss. This is known as the “no gain, no loss” rule. It means that the receiving spouse will be considered to have acquired the asset at the same cost as the transferring spouse. However, this rule does not apply to separated couples or transfers of assets between ex-spouses after the end of the tax year in which the separation took place.

While transferring the property to your wife might not trigger CGT at the time of transfer, it does not necessarily reduce the overall CGT liability. This is because your wife would inherit your original cost base for the property, and any potential capital gains tax would be deferred until she sells the property to a third party.

It is crucial to consult with a qualified tax professional or financial advisor to discuss your situation and ensure that you follow HMRC’s rules and regulations. They can help you determine the best course of action for your circumstances.

This information is not financial or tax advice; tax laws and regulations may change over time. Always consult a professional advisor for the latest and most accurate information.

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