If a married couple or civil partners buy an investment property HMRC the rules are
TSEM9812 – Property held jointly by married couples or civil partners: Overview: two main rules
There are two rules about property held jointly by married couples and civil partners:
- the ‘50/50 rule’ (ITA/S836) whereby most income from jointly held property is treated as split equally between the two spouses or civil partners for income tax purposes; the 50/50 rule applies unless there is a valid declaration on form 17; sections TSEM9814-9840 contain the details;
- the ‘form 17 rule’, whereby, if the true income split is different from 50/50, the couple can opt to be taxed on that basis for income tax purposes (ITA/S837); sections TSEM9842-9878 contain the details.
When you get married there are tax changes
Marriage Allowance
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.
This reduces their tax by up to £252 in the tax year (6 April to 5 April the next year).
Capital Gains Tax
If you and your spouse or civil partner are living together, any transfer of an asset between you is treated as giving rise to neither a gain nor a loss to the person transferring it. Any amount actually paid is ignored. If the person receiving the asset later disposes of it, they will be treated as if they had paid an amount equal to the total of your costs.
Inheritance Tax
In addition to the CGT exemption for gifts between spouses, a similar relief exists for inheritance tax (“IHT”) purposes in most cases, so that assets can be gifted from one spouse to another without triggering an IHT charge.
Plus unused Nil Rate bands can be transferred on death.
What about Investment Property?
The short answer is that it does not automatically become jointly owned on marriage, but at least you can transfer part of the ownership without incurring capital gains tax.
