CGT liability on family home

[CGTquestion]

My husband and I have been married for 24yrs and have lived in separate houses for 3 years. He owns his (inherited in 2019 from deceased parent), and we jointly own the house I live in, which has an interest-only mortgage. I have funds in my name to pay off the mortgage in 2025, but we cant move the mortgage into my name only because my earnings are very low.

We would like to transfer the house into my name only but obviously can only do that once the mortgage is paid off. Because we live separately, husband is worried that he will be liable for the CGT incurred for transferring of assets. (It would be about £250k)

I have read the guidelines and as far as I can see, we are legally married and can have only one marital home which we are allowed to transfer between us as we please with no CGT liability. Living separately surely does not negate that? Neither of us is planning to sell our homes for at least the next ten years.

We have no legal paperwork to say we're separated or similar, we just live in separate houses and are married.

If we transfer my house ownership into my name in 2025 after paying off the mortgage, will he get a CGT bill?
Any advice? At the moment he thinks he's right and I think I'm right!

Think you need professional advice on this. My guess is that unless he's made formal nomination to HMRC then your main residence (where you both lived together) is the primary for both of you (the only property free of tax liability) and CGT clock has been ticking on his inherited property since he acquired it irrespective of whether he stayed there or not. But I would definitely seek professional advice for clarity and best way to manage situation before changing anything.

I am not sure about capital gains tax but I had a friend who sold half of her house to a partner. When they bought a new house they struggled to get the solicitors to sign off on the paperwork as it could be seen as depreciation of assets and if she was to declare bankruptcy the same could be reversed.

you will need to research this before committing to anything as it may make it difficult to sell in the future

You are right, there is no capital gains as you can only have one main home as a married couple, but get advice before proceeding with the transfer if you are staying married.

You need to seek professional guidance as this is not clear cut.

Take a look at Hmrc help sheet hs281. This says spouses are treated as living together unless separated 1) under court order, 2) formal deed of separation 3) in circumstances where separation is likely to be permanent.

It also says if the marriage has not broken down but you don't live in the same house, you are still treated as living together for capital gains tax purposes.

Assuming that is the case then spouses can transfer assets at a no gain/loss - you essentially take on his ownership at the time he originally bought it.

But I still would get proper advise just to make sure nothing can come back and bite you.

Why are you living separately?

If its to try and maintain ownership of 2 properties and incur CGT on neither it wont work.

Thanks for all the advice!
(We live separately because it just works better that way. Like I said we have no plans to sell either house)

We will be taking professional advice but it's always nice to know I'm not talking total bollocks 🤣