Capital gains tax if house not sold.

[Notsuchaniceguy]

Hi, I had posted about separating/divorcing and me renting and continuing to pay half the mortgage so my wife could stay in the home for some time. It was pointed out that if I did that and the home was sold later I'd be liable for capital gains on my equity. Although she works as a teacher, unless her family step in she can't buy me out and arguably not pay the mortgage on her own.

But... I hear/read all the time about people leaving, moving back with family, a new partner and so on whilst the other person remains in the family home which is eventually sold. Am I right that there is a 9 month grace period for CGT after which if the home is sold then it must be paid?

If so what happens if the person in the home refuses to sell or just put off prospective buyers or some other delaying tactic and you have to go to court to force a sale? I assume this would easily take more than 9 months?

Is it that quite a lot of divorcing couples just end up paying CGT on the home?

I appreciate one way is you remain in it until it is sold and you both go at the same time but that could be horrific for us.

When you sell a house which has been your main residence, there is a 9 month grace period where CGT does not apply if you have moved out to another property . When divorcing this is extended to cover to the end of the tax year in which you move out. From April 2023, the time period before CGT kicks in is extended to 3 years from when you move out. Though it's not yet law yet there is no reason why it won't go through.

Any CGT payable is payable within 60 days of the purchase/transfer.

CGT isn't likely to be much unless the timescales are long and there has been a significant increase in value. It only applies to any gain when the property is not your main residence, subject to the grace period and relief above.

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