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Unusual circumstances?

  • FrankItch
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24 Jul 14 #440489 by FrankItch
Topic started by FrankItch
Never married, cohabited 19 years, 3 kids 10 to 17 years. House bought for ourselves & family with unequal contribution but deeds say “Joint tenants in common equal shares”. No mortgage. Separated 7 months she moved out, then bought a 350k house cash so now she owns 1 & ½ houses. I stayed at home with older kids & younger is shared. I pay all household & child costs for those at home & some for the one shared. I work, decent salary, she works part time for very small salary. I haven’t claimed maintenance.

She offered I live here till our youngest is 18 then we sell. I have had some advice that if we do that then she would be entitled to 50% the value at the date she left not the date of sale?

Can anyone pls advise if that’s true because its makes a huge difference to my financial plans to secure the family home not only for my kids childhood but as a base for them during further education after 18 & even to their children in future.

Am I also right that she would pay Capital gains on the proceeds of transfer becuse we are not married?

Thanks Frank

  • MrsMathsisfun
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24 Jul 14 #440505 by MrsMathsisfun
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If the deeds state 50/50 then that''s how the house will be split when the house is sold. Don''t think you can claim any of maintenance costs back.

Not sure about capital gains tax

  • Fiona
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25 Jul 14 #440533 by Fiona
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I don''t know why someone advised you that your partner would only be entitled to 50% of the value of the property when she left.. The law is complicated for cohabitants and there are too many myths perpetrated about the law.

Because you weren''t married property law applies rather than divorce law. If you were married the matrimonial assets would be shared according to a checklist of factors in s25 Matrimonial Causes Act 1973 and your needs would be a factor. Under property law (Trusts of Land and Appointment of Trustees Act) ownership is determined by the deeds of the property and unless the deeds state otherwise the assumption is made that joint owners have an equal interest in the property so it would be equal shares 50:50 when the property is sold.

There is relief from capital gains tax on someone''s principle private residence. If your ex-partner no longer lives in the property she doesn''t qualify for the relief and she will be liable for capital gains tax on her share. However there is no CGT to pay for the last three years or 18 months of property ownership. (NB It was three years but the Government has announced a reduction to 18 months. Although as far as I''m aware the law hasn''t actually changed yet the intention is to apply the new law to this tax year.)

However under the Children Act 1989 it is possible for someone to be ordered to make a property or their share of a property available to provide a home for children until they reach the age of 18 or finish a first degree. It''s also possible to claim child maintenance, capital claims for once off child related expenses and over 18s in education can claim maintenance from separated parents in their own right.

There is no substitute for independent legal advice. Although advice isn''t cheap it''s often a false economy not to find out where you stand and what options there are in your particular case. It makes sense to negotiate and reach agreement if you can because the costs of going to court are expensive, but if you know where you stand you can negotiate from an informed position.

  • FrankItch
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25 Jul 14 #440557 by FrankItch
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Thanks - Fiona said - "If your ex-partner no longer lives in the property she doesn''t qualify for the relief and she will be liable for capital gains tax on her share. However there is no CGT to pay for the last three years or 18 months of property ownership".

Assuming the law changes & we go over 18months (at 9 already) will she pay CGT on the difference between half the value now less half value when she left or when we bought it 19years ago? any ideas?

  • lukeskywalker
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31 Jul 14 #441041 by lukeskywalker
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The law did change in April 2014!
CGT relief is now only 18 months

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31 Jul 14 #441042 by lukeskywalker
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CGT is calculated on the profit gain made since the purchase price.

You get relief for the time lived at the property +18 months. If the property is not transferred in same tax year or sold within the 18month relief period, then CGT is calculated on the profit after the relief is deducted.

www.divorce-online.co.uk/blog/capital-ga...or-divorced-couples/

  • FrankItch
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31 Jul 14 #441044 by FrankItch
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Thanks - Is profit based on purchase price in 1996 70k or value when she left 450k!!! & do I assume she can deduct 50% of what she contributed to building works / extension? It would be good to know how its calculated so I can estimate the cost. Meanwhile I will wait till 16 months then ask her to sell ;-)good lever to pull. Cheers.F

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