Understanding Capital Gains Tax

[hirael]

Hi

As mentioned in a previous topic., my wife and I have been seperated for 5.5 years and I'm finally trying to sort the divorce out.

I own 50% of the house she lives in

Her parents kindly bought it for us in 2099

I moved out in 2017

I want to transfer the other 50% ownership to her giving her 100%

The house cost £125,000 in 2009

I don't know value now yet but let's say for arguments sake that it's increased in value by £50,000

I believe that because it's more than 3 years since I moved out, I would be liable for GGT on gifiting my share back to her even though I didn't pay the property

So that would be CGT on £25000 for my 50% share minus the 12k allowance so CGT on 13k to pay?

I also read that I could possibly claim partial residence's relief for the years that I lived there from 2009 to 2017 which would be 8 out of the 14 years since the house was bought - so would that reduce the CGT owing by another 57%?

My head hurts!

Many thanks for any help/guidance

I am by no means an expert but if you are still legally married I don’t think CGT applies.

From gov.uk
Example 4: You bought your house in January 2008 and sold it in January 2022. You lived in the property as your only or main residence apart from 9 months in 2009 when you lived in a different house. So, the house qualifies for relief for 159 out of the 168 months you owned it. A proportion of any gain you make from the disposal amounting to 159÷168 will qualify for relief. If you had moved out of the house at some time after April 2021 instead of in 2009, your relief would not be restricted as this absence would have been during the final period of 9 months. If you had bought the house before 31 March 1982, the calculation above would begin from 31 March 1982 and not from when you bought the house.

Get a move on as from april 2023, the cgt allowance reduces to £6k

Thank you very much for your help, really appreciate it.

I didn't realise that the CGT allowance was being reduced - that's bad news as no hope of getting it sorted before then

Hopefully the value won't have risen too much!

This is totally baffling me too. My situation is that we are divorcing, splitting sale of house proceed 50:50. We are planning on selling Jan 2024 (waiting for the market to settle, and giving time for DS to complete A'Level studies). If one of us moves out prior to this are we subject to CTG when we sell? From April 2023 the time period from leaving to selling and not being subject to CGT (as long as you haven't bought yourself another house) is moving to 3 years I believe.

Can anyone confirm that this is correct? V confusing. Have tried a tax adviser and they were useless and told me to contact HMRC which I will also do.

This is why financial situation should be sorted immediately as currently you can get 'no gain no loss' treatment up to the end of the tax year in which you separate from your spouse or civil partner – for example, if you separate in November 2022, you can only transfer assets between you free of CGT up to 5 April 2023.9 Jan 2023.

Have you purchased another property? If not, can you still claim private residence exemption?

Sorry, ignore the 9 Jan 2023 in my previous post.

Money and property when you divorce or separate

Not sure why the link isn't working. Anyway if you google it, HMRC has a good page on transfer of property on divorce

I read on here that cgt was being abolished for divorce transfer of ownership from April ... worth checking out?

Otherwise, you won't owe much, as outlined above.

There are certain deductions you can make as well eg estate agent fees if applicable, valuation fees

Thanks all for your help.

We separated in Sept 2022, but (D)H being very stubborn/won't face selling the house. I read that we need to sort before 5 April 2023 - doesn't give much time at all.

No one has moved out yet....but it won't be long. I hardly spend any time there at all. Have not and won't buy another house until I sell this one.

It is just so wrong isn't it, I feel forced to leave house as he won't/can't (ugh don't ask), have to shell out for rental until we can sell, then I'm subject to CGT. FFS.

I read that from April 2023 the period was going to be extended to three years since the person moved out in which you can sell and not pay CGT.

In your case @roycroppersshopper you are only talking a few months. Even if draft changes haven't come in, you are unlikely to go over the CGT allowance in just those few months

Thanks @ArcticSkewer