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I’m a retired builder and while taking my granddaughter to university in Northampton I saw a house up for auction.

It was a complete wreck. I had to pay cash of £105,000 as you could not get a mortgage for the property in that state.

I have travelled there every day for over four years doing all the work and slept there as well, and as there is still work to finish I’m living there most of the week.

I own one other property that I bought when I got married. 

It’s in my name as my wife was too young when we bought it in 1968 for hers to go on the deeds then.

My house in Oxford is worth about £500,000. 

The one I’m working is worth around £200,000 or a bit more, and that one is in mine and my wife’s names.

Would it be better to get the Oxford property in both our names now too for tax purposes?

Also, can I claim expenses against tax for the property I did up?

Heather Rogers replies: Before I deal with both of your questions, it’s worth running through the basic tax rules regarding main residences, the private residence relief that applies when you sell them, and the capital gains tax position on any other properties owned.

PRR is a relief from capital gains tax which would normally be due on the sale of a property.

If your property meets the following criteria, then PRR will usually apply and no capital gains will be payable on any profit made when it is sold.

– You have one property and you have lived there as your main home for the time you have owned it.

– You have not let part of it out, other than having one lodger at a time. If you have more than one lodger at a time, then private residence relief may not be allowable on the whole gain – so bear that in mind if you consider doing this.

However, if you have let your home out because you lived in job-related accommodation, you may still be OK.

– Part of your home has not been used exclusively for business.

– The land including buildings are less than 5,000 square metres (around an acre)

– The property was not bought for profit-making purposes.

If you have doubts on any of the above, get advice from a professional accountant on your situation.

It is also worth remembering that married couples and civil partners can only have one property between them as their main home at any one time.

If you buy a second property and live in that part time, then within two years of that purchase you can nominate which one of the two is your main home.

If you buy a third, you can re-nominate within two years of the purchase of the third which of the three properties is your main home.

More can be found on the website about nominating a property as your main residence and private residence relief in general.

If your property does not qualify for PRR in full, then you could have CGT to pay.

Your Oxford house

Turning now to the house you bought in Oxford when you and your wife married, if this is your and your wife’s main residence as a couple, and if it qualifies as so, then PRR would apply to the gain.

However, I would advise that your wife is named on the deeds. Also, if you have not already done so then both you and your wife should make wills.

Being named on the deeds will protect your wife if you were to die first, depending on the provisions contained in your will, or if you don’t have a will and die intestate.

There are no capital gains tax implications of putting your wife on the deeds, as asset transfers between husband and wife are exempt.

How the ownership is done, whether as joint tenants (where you both own the property as a whole) or tenants in common (where you both own a specified share) may also depend on your wills and whether a property life interest trust is applicable at all.

I suggest you see a solicitor to help you with the matters above. In a previous column, I explained why I think people should use a solicitor when making a will.

Your Northampton house

This house is not your main residence, and you have been doing it up, presumably for profit-making purposes.

Unless you are planning on selling your Oxford home and moving into the Northampton house as your home (which I understand is already in joint names) the latter will not qualify for PRR in any way and will be subject to CGT in full on the profit.

However, you can offset the following against any profit made.

– Costs of acquisition, for example stamp duty and solicitor’s costs.

– Costs of disposal, for example estate agent fees and solicitor’s fees.

– Costs associated with establishing, preserving or defending the title to, or rights over, the asset.

– Enhancement expenditure.

Regarding enhancement expenditure, to qualify for tax relief the following must apply.

– It must have been spent on the asset for the purposes of enhancing its value.

– The improvement must be reflected in the state of the asset at the time of the sale.

On the second point, this means the enhancement must both still be there and acting as an enhancement.

An improvement which has wasted away at the time of sale would not count, nor would an asset which has been removed – for example, an extension that had been put up, not liked and demolished.

Both you and your wife have a £3,000 annual allowance to offset against capital gains tax as well, unless you have made any other disposals in the year in which the property is sold.

More can be found on the website on categories of allowable expenditure.

It’s worth noting that there is no allowance for the element of the gain which relates to inflation.

In 2008, the indexation allowance, which gave relief for inflation, was abolished for individuals.

At the time, capital gains tax rates matched income tax rates, but the compensation for the loss of the indexation, in effect, was that the rates were lowered considerably.

It is interesting to hear this subject come up again in this election. The Liberal Democrats have mentioned bringing back indexation in their manifesto.

The Conservatives would stick with the status quo. Labour have left out any mention of either in their manifesto.