A Tax On Love?
6th June 2017
A Tax On Love?
With the wedding season in full swing, there are many things to consider: seating plans, guest lists, flowers and.....possibly tax implications!
Those couples who each own a house, marry and then decide to live in one of the houses, keeping the other as a rental property, could inadvertently be faced with a tax charge. This is because many mortgage lenders insist that spouses take out a joint mortgage, so the individual who owns the property will have to transfer half to their husband or wife, who will then also take on half of any mortgage debt. It is the transfer of debt that could initiate an additional Stamp Duty Land Tax charge, as the partner is then acquiring an interest in a second property.
Where the newlyweds each own a property there will also be Capital Gains Tax (CGT) complications. The main residence exemption for CGT only applies to one property per married couple, so they must decide which property the exemption will be used for going forward. The second property may eventually be taxable if sold for a profit.
On a brighter note there are tax savings that can be enjoyed by wedding guests. Wedding gifts of up to £1,000 per person are exempt from Inheritance Tax and parents of the bride or groom can gift up to £5,000 to the happy couple. (Grandparents can give up to £2,500).
If you require assistance in any aspect of tax planning then please contact a member of our team.