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Divorce/separation

Here you'll find divorce help and support from other Mners. For legal advice, you may find Advice Now guides useful.

Original poster

How can I minimise my stamp duty/Capital Gains liability when buying out ex husband?

16 replies

Doobydolly · 20/10/2022 10:20

Hi quick question..... I want to find out about my liability for Stamp Duty/Capital gains tax and can't get any straight answers, though I appreciate this is not simple. But some rough guidelines would be helpful if there are any friendly accountants/solicitors out there!

Basically I want to buy my ex husband out of the family house (we divorced years ago but never really sorted finances, and yes, I know we should have done, but we are where we are). House bought for £260k 20 odd years ago. Now worth around £1.6m. Existing mortgage of around £200k. After taking into account other assets we have worked out I need to pay him around £500k and then property will be owned solely by me. But is Stamp duty payable by me, and if so would it be on the £500k Or the value of the house? And as far as capital gains goes, is my ex liable, given he will be receiving a lump sum of said £500k? And if so, how much will he likely have to pay? I know you can offset various expenses etc and we all have an annual allowance.

OP posts:
QforCucumber · 20/10/2022 10:26

The cgt is owed by him, as he is receiving the payment - unless he’s lived in the house as resident over that time. There’s a 12300 allowance and the the remainder liable for cgt.

tiredofthiisshit21 · 20/10/2022 10:27

My ex bought me out and had to pay stamp duty, I believe it was only on the amount he paid me.

Original poster
Doobydolly · 20/10/2022 12:00

Ah thanks for your responses. very helpful.

OP posts:
gogohmm · 20/10/2022 12:05

You pay stamp duty, he pays cgt

Original poster
Doobydolly · 20/10/2022 12:33

QforCucumber: Thank you -- Do you know if he would have to pay CGT on the amount i pay him ie the £500k, or the entire value of the house? or half the value of the house?

OP posts:
EmmaH2022 · 20/10/2022 12:45

OP have you taken advice from an accountant, the fact that it takes a while to sort a marital asset might be a factor.

AFAIK he has to pay CGT on the sale of a home he doesn't live in - it will be offset against various things, but they do ask if the price was reduced for any reason. The CGT is payable on the sale to you, not the value of the whole house.

I might be in the same position when mum goes in that if I want to buy my sister's half of mum's house, very unlikely that I could but just in case -
I'd have to pay effing SDLT even though I'd inherit half of it. So watching this with interest.

Original poster
Doobydolly · 20/10/2022 16:29

It's all so flipping complicated, my head is spinning with the whole nightmare. Argghhhhhh!!! Kicking myself for not sorting all this out sooner when we would have been able to transfer assets between us before the divorce was finalised. My own stupid fault for burying my head in the sand.

OP posts:
QforCucumber · 20/10/2022 16:47

It is payable on his portion of ownership, so all depends on how the house was purchased - or how the split was agreed at divorce. If you are literally working on a 50/50 basis then he pays the CGT on the taxable amount of his half of the equitable value increase.

EmmaH2022 · 20/10/2022 17:16

Doobydolly · 20/10/2022 16:29

It's all so flipping complicated, my head is spinning with the whole nightmare. Argghhhhhh!!! Kicking myself for not sorting all this out sooner when we would have been able to transfer assets between us before the divorce was finalised. My own stupid fault for burying my head in the sand.

It's not complicated

annoying in terms of tax, sure

presumably you are doing all this via a solicitor so they can tell you as well

if you look at the CGT forms on the government website, that will be very useful
just put dummy figures in

the accountant was able to reduce liability for my uncle - I was his POA
so it was worth paying that.

SDLT - if you've always lived there, it just occurred to me, you should pay the reduced rate?

Original poster
Doobydolly · 20/10/2022 17:54

EmmaH2022 thanks for your advice, will take a look at a the govt website. I am still not sure of what amount we are paying CGT on though - if I buy my ex's share for £500k, does he pay capital gains on that sum? Or the actual value of the house? Or half the value of the house? As for Stamp Duty, yes, I have lived in the house until fairly recently, so presumably that means I don't have to pay so much stamp duty?.

OP posts:
EmmaH2022 · 20/10/2022 18:00

OP
he pays CGT on the sale price, so on the amount you pay him

the reason I mentioned that they ask if the price was reduced is that they will get their CGT on the market value, if they think someone has reduced a price to reduce a CGT bill. Hope that makes sense.

it's definitely wise to get advice because as I say, I don't know anything about marriage and it might be that you can both get some sort of reduction? You could ask on the legal board but an accountant is probably best placed to help.

SDLT - yes, it strikes me that you aren't buying a new property, so just thought there might be a glimmer of hope for a discount? That's just a thought. Do it now so you can benefit from the shit show of a govt - the next one might reinstate SDLT to what it was before Truss changed it!

Original poster
Doobydolly · 20/10/2022 19:22

I thought that CGT was paid on the profit you make - so we bought the
house for £265k, and today it is worth around £1.6m - a pretty hefty £1.35m, but over a 24 year period. However, i'm only paying my ex £500k after taking into account various other assets including his pension. So surely the CGT must be on the "gain" he has made over the years, not just the £500k I am paying him This is what I find really confusing

OP posts:
Fiftyplanner · 20/10/2022 19:28

There is also PPR available, details here: www.gov.uk/tax-sell-home/let-out-part-of-home

EmmaH2022 · 20/10/2022 19:55

Doobydolly · 20/10/2022 19:22

I thought that CGT was paid on the profit you make - so we bought the
house for £265k, and today it is worth around £1.6m - a pretty hefty £1.35m, but over a 24 year period. However, i'm only paying my ex £500k after taking into account various other assets including his pension. So surely the CGT must be on the "gain" he has made over the years, not just the £500k I am paying him This is what I find really confusing

Sorry
i was assuming that as a given
yes, it's payable on the gain.

Mumof3confused · 20/10/2022 23:00

Have you filed a financial order? I believe that you pay no CGT/SDLT if the transaction is done between spouses as part of a financial order. The fact that you’ve taken a long time to do it might have some bearing. I’d get professional advice

Lonecatwithkitten · 22/10/2022 05:52

Mumof3confused · 20/10/2022 23:00

Have you filed a financial order? I believe that you pay no CGT/SDLT if the transaction is done between spouses as part of a financial order. The fact that you’ve taken a long time to do it might have some bearing. I’d get professional advice

I was going to mention this if the sale is as the result of a financial consent order seal by the court usually there is no cat. Or stamp tidy to pay. Plus these are considerable assets if you don't get a consent order there is nothing to stop him coming back for more at a later date.
What you will pay in legal advice you will easily save in this case.

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