Capital Gains Tax payable on lump sum?

[Fluffybubble]

I divorced my exh last year and the DA came through in September. We are now sorting the finances for a consent order / clean break (I know this is the wrong way around ).

We have agreed a lump sum, based upon his investment in renovations in my property (he moved in when we married and we extended to accommodate his children). The house and mortgage remained in my name and we were married for three years. We have no joint children.

I am now considering my options for paying him the lump sum and understand that CGT may be due on this, as we are already divorced. Is this correct? Should this then be part of the negotiations? I would like to keep the house and extend the mortgage to pay him, ideally.

What I thought was fairly simple is apparently quite complicated!

TIA

What capital have you or he gained on?
If the house has always been in your name, then it’s not like you’re buying him out - no assets are being gained?

I will say though that CGT is one of the more confusing taxes, and it’s usually best to ask an accountant for advice.

I'm not sure I've understood you correctly.

Who is it you think might be liable for CGT?

CGT is potentially payable on a gain on an asset.

As I understand it, where it usually kicks in in this kind of situation is where one party buys another property after divorce, while retaining some extent of ownership on the original FMH. If by the time the FMH is sold or their share is paid to them, the value has increased then there might be CGT (if over allowances) as their principle private residence exemption won't apply to that property any more...

So if you're still in the FMH you yourself aren't liable for CGT. It would be him on his share.

Has the property gone up in value a lot in the meantime? If it has then potentially your ex might be.

Best get some advice from someone who knows what they're talking about - I'd find a tax expert.

Thank you, both.

Sorry, I know it's confusing! I think that I may be liable to pay CGT, apparently the person in receipt isn't?!

The value of the property has increased as a result of the renovations (extra bedroom and bathroom added) but I would be intending to stay here if possible abs just pay him off.

It sound like I might need a tax expert then. ..Thank you for your help!

You don't pay CGT on your principal private residence. Do you have more than one property?

I'd speak to a solicitor, I might have misunderstood and there might be CGT implications in a settlement. I'm not an expert :)

Does this help?
www.pinsentmasons.com/out-law/analysis/divorcing-couples-beware-the-capital-gains-tax-trap

Thank you, noidea. No, we just own my property and my exh has moved into rented accommodation.

I have looked at the link and I am sure the answer is in there somewhere but I think you may be right and I may need a solicitor to unpick it for me! Thank you so much for your help .

If he moved out during tax year he's got until the end of that tax year or something and he won't have to pay CGT on the property he moved out of

Its the family home you dont pay anything

There's not much detail in what you've posted, but nothing you have said suggests that you have any GCT to pay.