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Can anyone please help me with regard Capital Gains tax on my house after divorce please?

(5 Posts)
whycantwegoonasthree Fri 20-Jan-17 10:15:20

My husband and I have been separated for some time, for several years while living in separate parts of the same home. But I moved out in October 2015, and have been renting since.

The divorce has been plodding its way through since then, and is in it's final stages.

My soon-to-be-ex husband is buying me out of the house.

The transfer of funds is due to go through when the divorce is finalised. No way of knowing how long that will take though.

I know that if it happens before the end of March i'm within 18 months of it not being my primary residence and therefore not liable. But if it doesn't, (and it may well not) will I be liable and if so, how much for?

We bought the house in summer 2009 for £320k and did a further £150k of work on it (it was a wreck). The value of the house now is £815k. Therefore my share of the 'profit' if you like is half of £345k- therefore £172.5k.

Will I be liable for capital gains tax on all of that?

I'm losing sleep on this… I've tried wading through the HMRC website about it but can't make head nor tail of it. There's something about if the house and grounds are less than half a hectare then its exempt? I've no idea what that is in reality. It's an ordinary 1930s terraced house, with a medium sized garden and a garage at the bottom of it.

I'd be massively grateful if anyone could share any knowledge they have on this please. I REALLY don't want to get screwed on tax having just fought so hard not to get screwed on the divorce settlement…

Huge thanks in hope.
3

IndigoSister Fri 20-Jan-17 15:55:12

This might help www.divorce-online.co.uk/blog/capital-gains-tax-and-divorce-a-guide-to-capital-gains-tax-for-divorced-couples/

Downstairspoo Fri 20-Jan-17 19:15:55

OK I'm not an accountant but has just done my capital gains tax return so I'm testing my own knowledge!

My understanding is this
You owned the property Jul 09 and let's say it doesn't get sold until Jul 17
That's 8 yrs = 96 months
Up until 18 months after you moved out you have exemption from capital gains tax
So if it's sold in Jul 17, 4 months out of the 96 month total ownership are not exempt (assuming you lived in it from purchase)
So your gain is 4/96 X 172500
= £7187 gain
However you can gain up to £11100 per year tax free so in that scenario no tax to pay

Think you've got 6 months ish after March at that sale price before you start getting out of your tax free gains exemption

Downstairspoo Fri 20-Jan-17 19:27:20

Actually I'm not totally sure that's right as the HMRC help sheet refers to the date of final order also being relevant - also helpfully says too complicated for the help sheet and seek tax advice - maybe there's further exemptions available.
However I do think that whatever the gain is, you'll only be liable for the number of months that no exemptions apply divided by the total period owned, and as that's likely to be a v short period hopefully no or v little tax to pay

Do get some proper advice from an accountant though!

whycantwegoonasthree Fri 20-Jan-17 20:37:58

Thanks so much Indigosister and Downstairspoo...

Downstairspoo I've been wading through the HRC website and trying to make head or tail of it... I think what you've said seems right, which is encouraging! But bloody hell they don't make it very clear do they!?

I'm waiting to hear back from my accountants on it! But hopefully it'll be a few hundred quid at the most, and hopefully nothing… It would seem deeply unfair if because the divorce has taken so fecking long (through no fault of mine) I would get knobbled with capital gains…

Many thanks!
3

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