Capital gains tax if I move out and house sale takes a while

[Notsuchaniceguy]

I have posted on this before but am a little confused from what I've read from solicitors' advice pages on new rules form April 23.

I could just about afford to move out into a rental and continue to pay half the mortgage. Am I right that if divorce proceedings have been started, even if it took some time to sell our house, I can still claim principal private residence relief when it sells? I'm going on this advice here.

• Up to three years after ceasing to live together as partners.
• For an unlimited period if the transfer occurs as part of a formal divorce agreement.

If so, does it allow for choosing not to sell the house straight away? I don't want my W to be pressured to sell if I wasn't living there, although I'd have to get my agreed share of equity at some point, ideally within a few years. There are no children, both have adult children from previous relationships, non resident.

To expand on the not wanting to force the sale, is it possible to agree and seal a financial split and/or divorce with a timeline for house sale that extends beyond agreement of financial split/divorce? I don't mean a court agreed Mesher type thing but a mediated mutually agreed decision that is binding?

My reasoning is that if either of us came into more money post financial split/divorce all that is claimable is the agreed share of the house?

It is likely W will inherit some money in a year or so. I don't want to claim any of that and in an ideal world she could then remain in the house and be able to pay me the agreed equity, or we sell at that point and she is able to buy rather than rent which is all she could afford now.

(Her salary £40k mine £58k equity in house £200k value £330. Both age 58. So as you can see, buying impossible as a cheap 1 bed flat in our area is £225k)

Not having to move quickly is what she wants and as we have a dog, renting isn't easy.

This is quite a tricky area to navigate. I separated from my wife several years ago, moved into my parents and now the family home is being sold. I rang HMRC who put me through to a CGT adviser who then put me through to a specialist adviser to clarify the rules - so I would do that, if I were you.
If payable, their website also has an easy to use online calculator to get an idea of the amount and how to calculate it.
My understanding is that, if there is a formal agreement/mesher agreement in place after separation, capital gains is not payable but if, as in my case, there’s no formal agreement, it is. There is also the first three years to transfer the asset before it becomes payable.
If the transfer or sale takes place after three years, 50% of the gain for the percentage of time between separation and sale/transfer (minus 9 months) is used. It isn’t as bad as it first appears and there are allowable renovations which can reduce the figure more. My solicitor advised that my ex wife and I split the cost of the CGT due to the fact that our separation was a mutual decision and she benefited exclusively from living in the property. It would hardly be fair for me to pay the tax alone when the agreement benefited her more than me. This is, apparently, usual and is written into our consent order. Hope that helps.

If you have a financial consent order as part of your divorce, nothing following the decree absolute can be claimed. If you don't have a financial order, one person can still make a claim, even if divorced.
Depending on the exact circumstances, the person staying in the property is generally expected to cover the mortgage and outgoings as the person leaving still has their own living costs to pay. The person leaving still gets their share of the equity in the property at the point of sale or transfer because they haven’t benefited from their investment in the property in the meantime - eg a share of the equity/valuation at the point it is sold, not based on the value today.

A solicitor would advise what that share should be based on everyone’s assets and liabilities and other information. You can find that out in one consultation.

@Jonathan70 thank you that is helpful.

I'm tired it's late I had wine tonight I don't understand much.
That said, I got a mesher order on the proceeds of the house sale, by X date, because I'm under impression that CGT liability kicks in 9 months after you move out. is why I needed the MO.

I don't think HMRC would ever have found out, and house prices have fallen, and our house isn't worth that much anyway, but this way I didn't have to worry about a sneaky tax bill.

Yes, if you’ve got a mesher order, you’re all good.

When the house sale is delayed by several years after separation, you’re allowed to minus 9 months from the taxable period between separation and sale - I guess that’s to allow for the time taken to sell a house which is outside of your control.