Leaving the family home due to DV and Capital gains tax

[windinthehills]

I left my family home last August and my partner of 23 yrs due to our relationship breaking down through his controlling and narcissistic behavior oh yes and also me finding out about his secret relationship (friends only of course) with another woman (for several years).
We agreed that I would swap my half of our jointly owned house for my sole ownership of his late parents house which was smaller but with sufficient land to keep my two ponies at home. (I had been begging for us to move somewhere with land for them for 3 or so years prior to this or alternatively for him to buy me out, which he just laughed at me and said there was no way i was leaving).
Anyway, once I had moved out and spent £'000s redecorating, cleaning and updating his late parents house in anticipation that it was going to be mine, guess what, he changed his mind surprise surprise. I know, I should have got the deeds transferred first (mistake number 1). Things went from bad to worse between us after that and ended up with a domestic violence incidence and the police got involved, ending up with my ex being given a domestic violence protection order for 28 days. So I was living in a house that he owned (his parents house) after being attacked by him, and had to find somewhere else to live very quickly because I didnt want any contact with him as I didnt feel safe.

He is insisting that he wants to buy my share of our house so I did not apply for an occupation order to live there instead (mistake number 2). I've ended up renting somewhere else to live while we sort out our settlement. My issue is this - I found out last week that there is a 9 month limit to how long you can be absent from your main residence before you pay capital gains tax when it is sold. The only way you can avoid this is by moving back into your main residence from what I have read since. Obviously I can't do that - my ex has been living there alone since August and we only have contact through solicitors. Has anyone else come across this and found a way to deal with it ? If I have to pay Capital gains tax it will effectively be about a third of my half of the house which seems completely unfair and discriminatory to the victim of DV (- there is no mortgage on the house and I am retired so wont be getting one anytime soon). Any one out there with experience of this situation or similar?

Yes, but you get private residential relief for the period of time you lived there as your main residence and you only get taxed on your half of the gain, minus half the costs of buying the property and selling it (any major works which were done on the house). So it isn’t as bad as it first appears. The tax should be taken into account in your overall split of assets - in my case, the capital gains was paid from the overall equity before the rest was split as per our agreement. So we essentially went halves on it.
How long did you live in the house together before you moved out and how much equity is in the house?

Hi thanks for your advice - we've lived in the house since 2007, there is no mortgage and its worth around £650k so my half about £325k, we bought the house for £350k and spent around £100k on it - this should be deducted from the gain I guess ?

Theres an online calculator you can put all the details in but, say your share of the equity is 325k and the house is sold in 2025 when you’ve owned the house for 18 yrs.
You’re exempt for the first 9 months after you moved out so until around May this year.
Your share of major renovations is 50 k plus half the buying and selling costs (inc stamp duty in 2007) is deducted from the gain. Let’s say your total gain is then £225k. You then apply private residential relief for all but a year or so (the time you lived there plus 9 months) or about £210k of the whole amount. Leaves you with 15k taxable gain. You have a capital gains tax allowance of £3k. Even if your income puts you in the higher tax bracket your capital gains tax is going to be 28% of, what, 12k or £3300 ish, or just over £2k if you are in standard tax bracket.
To work out your Private Residential Relief you take the number of months you lived in the property plus 9 months and divide that by the number of months you owned the house overall (when you sell) and multiply that by the gain - the gov online calculator takes you through it.

You can only include major renovations like kitchen, bathroom, extension, windows - not redecoration, carpets etc. And only half of the amount - your share. Hope that makes sense.
When coming to a settlement, this tax should be included in what comes off of the joint total. Remember to include all assets - you are entitled to a share of both houses, even if one isn’t in your name, pensions, savings etc. all go in the pot so see a solicitor for advice.

Thanks so much for your reply and advice that it alot less than I was thinking it would be, im quick to go to the disaster scenario atm i think its the stress of it all. We aren't married so in the settlement its only my half of the house and a loan that i made my ex that i am seeking to recover, together with the costs of renovating his parents house which he has now benefitted from. Thanks again

No worries. I replied because I did exactly the same as you and panicked at the thought of tens of thousands being taken in tax, even though I had no choice but to leave. However, I saw an accountant who quickly reassured me. Obviously if it takes ten years to reach a settlement and the house is sold, it’ll be more, but if it’s all sorted in the next couple of years you’ll be fine. Don’t forget that your half share is at the point it’s sold or when you’re bought out, not what it was worth when you separated, so if the market starts to pick up and it takes a while to get a settlement agreed you are using the most recent figure. My ex tried to get me to have a share of the amount the house was worth when I left several years ago which was a 200k difference in their favour. When you come to doing the calculation, feel free to msg me. Best wishes

Isn't there a special relief for CGT when you are separating / divorcing?

www.gov.uk/government/publications/capital-gains-tax-transfer-of-assets-between-spouses-and-civil-partners-in-the-process-of-separating/capital-gains-tax-separation-and-divorce

If you’re transferring assets it’s 3 years for married couples but OP isn’t married and they’re selling. PRR is the relief that applies.

Apologies, ignore me. I clearly didn’t RTFT properly.

@M123gotns its good for other users to know because it’s been extended 👍

Thankyou so much for your advice, its been incredibly helpful you are a star😘