Getting Married - Have a Property Each - What effect is there?

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BobbyFowler

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Myself and the incredibly lucky Mrs Fowler are getting married soon. We've got a property each. Mrs Fowler currently has friends staying in her place, while we live together. By law does her property become an investment property once we get married? If this is the case & we were to sell on the investment property down the line, do we pay capital gains on the difference between purchase price and sales price or is the time between buying the house & the marriage taken into account?
 
BobbyFowler said:
Myself and the incredibly lucky Mrs Fowler are getting married soon. We've got a property each. Mrs Fowler currently has friends staying in her place, while we live together. By law does her property become an investment property once we get married? If this is the case & we were to sell on the investment property down the line, do we pay capital gains on the difference between purchase price and sales price or is the time between buying the house & the marriage taken into account?
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You're already on dangerous ground...the future Mrs Fowler is pretending to live somewhere else when in reality she lives with you.
This other property is not her PPR therefore there are tax issues
 
Fair point.
Let's say, for arguements sake, that the future Mrs Fowler was living at her place & having exchanged vows, decided to move in with myself. What is the tax situation then?
 
BobbyFowler said:
Fair point.
Let's say, for arguements sake, that the future Mrs Fowler was living at her place & having exchanged vows, decided to move in with myself. What is the tax situation then?
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If that were actually the case, the property would become an investment property and subject to CGT on the difference between the price when you sell it and its value (inflation adjusted) when she moves in with you.
Plus there may be stamp duty clawback issues if she bought in the last 5 years as a FTB.
 
Cheers for that. So do we have to go out & get someone (surveyor?) to put a value on the house at todays price?
 
KalEl said:
If that were actually the case, the property would become an investment property and subject to CGT on the difference between the price when you sell it and its value (inflation adjusted) when she moves in with you.
Plus there may be stamp duty clawback issues if she bought in the last 5 years as a FTB.
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Not quite right.

The proportion of the value which will be subject to tax in the future if Bobby's Fiance sells the house is determined on a time basis, with the last year of ownership always deemed to be occupied by the seller.

So, if she sells the house within 12 months of moving out (presuming of course that she lived there for the rest of the time, didn't carry out a business from it and any rental income, while she lived there, was within the rent-a-room relief amounts) there will be no CGT payable.

If she sells it more than a year after moving out, CGT will be payable. Suppose she owned it for a total of 5 years, 3 years of which she lived in it. Then, for CGT purposes, it was her Principal Private Residence (and not subject to tax) for 4/5 of the time (3 years actual residence plus last year deemed = 4 years out of five). If the gain made on the sale is 100,000, then 4/5 of this is exempt from tax, leaving just 20,000 (1/5) subject to cgt at 20%.

As someone else mentioned, on moving out (and not selling immediately) there may be a stamp duty liability.
 
Ahh Bacchus

The Future Mrs Folwer's "friends" are just too damned nice to pull a fast one like that ;)
 
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