Can We Sell a Flat Without Paying CGT?

In the Financial Times today, a reader asks for advice from their tax expert. Owning multiple properties can often lead to confusion regarding tax implications when it comes to selling property. In this article, they address a reader’s query about selling her husband’s flat without paying capital gains tax (CGT) and explore the options available to them.

Multiple Flats

The reader and her husband each own flats in London. While the reader owns her flat outright, her husband still has £25,000 left on his mortgage. They have been residing in the reader’s flat and would like to sell the husband’s property without facing CGT. Additionally, the reader wants to know if paying off her husband’s mortgage would legally make her a joint owner.

According to Ed Cubitt, associate at Withers, when an individual sells their sole or main residence and realizes a capital gain, they can seek relief from CGT through principal private residence (PPR) relief. However, for married couples or civil partners living together, they are only entitled to one main residence between them for PPR relief purposes. In this case, it seems that both the reader’s and her husband’s main home since their marriage has been her flat.

If the husband occupied his flat as his main home from its purchase until their marriage, he is still eligible to claim PPR relief for the period before their marriage, as well as the past nine months of his ownership, as long as the property was their main residence at some point. Since the capital gain is divided over the ownership period, the husband will only have a CGT bill on a portion of the gain. If he hasn’t utilized his annual CGT allowance, it can also be used to offset any gain.

In situations where a married couple or civil partners own more than one property, they can elect which property will be considered their main residence for PPR purposes. This election is made in writing to HM Revenue & Customs, and even if the joint main residence is owned by only one of them, spouses and civil partners must make a joint election. The election must be made within two years of acquiring another residence, such as through marriage or civil partnership. However, in this case, it appears that the husband’s flat is no longer being used as a residence. If this is incorrect, choosing the husband’s flat as their joint PPR (if within the time limit) could impact the availability of PPR when the reader eventually sells her property, so it is advisable to seek professional advice on this matter.

Moving on to the reader’s second question, the easiest way to pay off the mortgage on the husband’s flat would be for the reader to gift him cash. He can then utilize this cash to clear the remaining balance. This approach minimizes the risk of the reader being treated as a co-owner or purchasing an interest in the property. To ensure the transaction is properly documented, signing a simple deed of gift might be advisable, explicitly stating that the reader does not acquire an interest in the property. From a tax perspective, there are no implications for the reader making this gift, but it is essential to note that once the gift is made, it is up to the husband to decide whether to use it to pay off his mortgage or not.


Selling a property without paying CGT can be challenging, especially when one owns multiple properties. In the reader’s case, her husband may be eligible for PPR relief for a portion of the capital gain on his flat since it was his main home before their marriage. Making a joint election for PPR relief could potentially affect the availability of relief when the reader eventually sells her property. Seeking professional advice on this matter is recommended.

Regarding paying off the husband’s mortgage, gifting him cash is the simplest route. To ensure clarity and avoid any legal and tax complications, it is advisable to draft a deed of gift stating that the reader does not acquire an interest in the property. Remember that the decision of using the gifted amount to pay off the mortgage lies with the husband.

Always consult with a professional tax advisor or lawyer to ensure you fully understand the implications of your specific circumstances and make informed decisions.