Q My partner and I intend to buy a property and move in together. She inherited a property 20 years ago (worth £300,000) when her parents died, whereas I own my own property (worth £600,000), which is in a family probate trust for my two children (my wife died four years ago). I also own a flat bought in 1996 for my son while at university, which is now let out to tenants and worth £140,000. We are retired with no mortgage and plan to buy our joint home with the proceeds of the sale of both of our residential properties. It makes sense to us for her to move in with me and sell her house first, giving us time to search for a joint property while putting mine up for sale.
Where do we stand in terms of capital gains tax, stamp duty and house purchase if we are not married and not in a civil partnership? What is the correct way forward financially? Please advise.
A If you had said: “I own my own home (worth £600,000)” and stopped there, I would have been able to say the answer is easy-peasy. Assuming your partner has lived in the house she inherited as her home, there won’t be a capital gains tax bill. Same for you if your house is your home. And you don’t need to be legally conjoined to be able to jointly buy property. But as your current properties are worth such different amounts, you may want to think about owning your new joint home as tenants in common with you each having a percentage share to reflect your uneven contributions.
But then you said the words “family probate trust” and my heart sank because trusts complicate things and can also affect liability to CGT. However, according to Town & Country Law, if the trust was set up properly, you can sell your home and move somewhere new. And you still have the right to reside in the property until your death. It starts to get complicated if you move from sole to joint ownership. My advice would be to go back to the solicitor who drew up the trust for the legal ramifications of your joint plans. He or she should also be able to advise on getting a new will drawn up.
As far as stamp duty land tax goes, even though you have the flat that you rent out, because you will be moving from one main residence to another, you won’t have to pay the higher rate of duty on your new home.