A well respected, award winning social enterprise
Volunteer run - Government and charity funded
We help 50,000 people a year through divorce

01202 805020

Lines open: Monday to Friday 9am-5pm
Call for FREE expert advice & service info


What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

What steps can we take to reach a fair agreement?

The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

What is a Consent Order and why do we need one?

A Consent Order is a legally binding document that finalises a divorcing couple's agreement on property, pensions and other assets.


Do you need help sorting out a fair financial settlement?

Our consultant service offers expert advice and support to help you reach agreement on a fair financial settlement quickly, and for less than a quarter of the cost of using a traditional high street solicitor.


Capital Gains on divorce (more than 9 months after separation)

  • Donut723
  • Donut723's Avatar Posted by
  • Junior Member
  • Junior Member
More
03 Oct 21 #517831 by Donut723
Topic started by Donut723
Does anyone know whether capital gains tax is payable based my circumstances below:

February 2019 (We separated and I moved out, wife stayed in FMH since)
April 2019 onwards (I've been renting a property - not bought anything)
July 2021 Decree Absolute - house to be sold and proceeds split.

I want to be a bit prepared for when the FMH sells!

Thanks everyone - I just can't find an answer to this anywhere.

As its been more than 9 months since I lived in the FMH am I liable? Is where I've been renting classed as my main residence (I'd presume so).


  • Vigorate
  • Vigorate's Avatar
  • Elite Member
  • Elite Member
More
04 Oct 21 - 04 Oct 21 #517833 by Vigorate
Reply from Vigorate
I am in a similar situation and the advice I received from a Tax expert leads me to conclude that you will be liable for CGT the period from 6 April 2019 until the house is sold, minus 9 months.

The last 9 months of ownership of a property are covered by the relief even if an individual has not lived in the property during that period.

Further details of the advice I received are in a post titled: Capital Gains Tax - Beware
Last edit: 04 Oct 21 by Vigorate. Reason: adjustment

  • Donut723
  • Donut723's Avatar Posted by
  • Junior Member
  • Junior Member
More
04 Oct 21 #517834 by Donut723
Reply from Donut723
Thanks for the reply.

I agree with you, I think I'd be liable. From what you are saying is the period of liability from the tax year after the date I left (April 2019), or would it be from when me and my ex wife bought and paid for the house (Feb 2017)?

I guess if it is based on just the gain while I've not lived in the FMH (plus the 9 months) the issue here is how on earth do I come up with a value of the FMH on the day I separated!?

Thanks, this all seems incredibly complicated. It seems also that the rules are different if you transfer equity versus selling and splitting proceeds of sale.

  • mirage63
  • mirage63's Avatar
  • Premium Member
  • Premium Member
More
04 Oct 21 #517840 by mirage63
Reply from mirage63
My partner is in a similar position.
He moved out of the FMH in September 2017, and been renting ever since, and the house is only now going on the market after a signed Consent Order. The ex W has remained in the property since Sept 2017.
His solicitor has never mentioned CGT and we only know there could be a possible tax bill on a sale from reading wikivorce.
The house was valued in writing by an EA in October 2017 and the likely sale cost would probably be plus £10,000 at best so would this incur a tax charge?

  • Donut723
  • Donut723's Avatar Posted by
  • Junior Member
  • Junior Member
More
04 Oct 21 - 04 Oct 21 #517841 by Donut723
Reply from Donut723
Yes I think it would incur a charge but it may well be within his CG allowance. The way I read it, but I am happy to be corrected, is that it's based on the value of the house 9 months after he moved out (June 2018?) and what it sells for. How you get a June 18 value I do not know. If you are talking 10k increase in FMH value (which I presume would be 5k to him on 5050 split) I don't think you are talking huge amounts (it's 18pc on properties for basic tax payers I think)
Last edit: 04 Oct 21 by Donut723.

  • Vigorate
  • Vigorate's Avatar
  • Elite Member
  • Elite Member
More
05 Oct 21 - 05 Oct 21 #517842 by Vigorate
Reply from Vigorate
Total Gain is the difference between what you paid for your property and the amount you got when you sold (or 'disposed of') it. It is not directly correlated to the "value" of the property at the time of separation.

From a UK tax perspective, on a disposal of an asset, the question is who owns it, and if held jointly with a spouse/ex- spouse, it is treated as owned 50% each. Assuming the property is jointly owned the below applies:

Apportioned Gain = 50% of the Total Gain x number of days from ownership to separation plus 9 months in days / total number of days from ownership to disposal

The amount subject to CGT = Total Gain - Apportioned Gain - £12,300 exempt amount

Either 18% or 28% tax rates apply.
Last edit: 05 Oct 21 by Vigorate. Reason: adjustment

  • mirage63
  • mirage63's Avatar
  • Premium Member
  • Premium Member
More
06 Oct 21 #517847 by mirage63
Reply from mirage63
Thank you for the detailed information.

It was purchased for £110,000 in 2003 and is likely to sell for £175,000 -£185,000 but a quick sale is desired.The property is jointly owned and she requested it was put into tenants in common in April 2018. As a lower tax payer 18% tax would apply.

I'm annoyed the solicitor never mentioned this as it could have been taken into consideration in the Consent Order, maybe he could have asked for her to pay half as he has had to concede on everything so far.

Moderators: wikivorce teamrubytuesdaydukeyhadenoughnowTetsSheziLinda SheridanForsetiMitchumWhiteRoseLostboy67WYSPECIALBubblegum11