Money
Our experts
Q&A: Downsizing, capital gains tax
John Husband runs the Money Clinic for Saga Magazine and has been writing about business and personal finance for 40 years. In his regular Q&A sessions for Saga's online Money zone, John answers your questions:
Q. My partner and I are of retirement age and live in separate houses, both mortgage free. We are considering downsizing with the idea of buying a joint property and living together. The financial benefits seem obvious but are there any pitfalls?
A. The most obvious one is that as owner occupiers any money you make from the sale of each property would be exempt from capital gains tax. If you go ahead you will only have one property between you which will be exempt. Another point to bear in mind is which form of joint ownership is best for you.
If you own a property jointly for example your other half inherits your share automatically on the death of one of you. If you choose to be "tenants in common" you can each leave your share to third parties. You might want to take professional advice as to which best suits your interest.
Q. What tax would have to pay if you own and sell a second property?
A. If you own two homes and sell the one which is not your main residence any profit you make will be subject to capital gains tax. This will be charged at your top tax rate. However there are legitimate expenses and allowances which can be set against any such gain. So it's worth taking professional advice before going ahead.
* John Husband's answers represent his own opinions and are for general information only. Always seek independent financial advice. Email John Husband your finance and money questions to web.editor@saga.co.uk
