Capital Gains Tax on property in divorce

[changeoflife]

Does anyone know if we will be liable for capital gains tax if my exh transfers the marital home ownership over to me?

This is the circumstance:

Bought property 10 years in my name only.

5 years ago his name was added to the mortgage & deeds as we were re-mortgaging.

4 years ago we separated. He moved out. I have stayed in the marital home with our 2 children. My exh has since bought another property where he resides.

I now want to sell the home & my exh has agreed that I can have all the equity from the marital home to purchase a new property for me & the children. The new property will be in my name only.

We are not yet divorced.

In this scenario are we liable for capital gains tax or is a transfer of the asset allowed as part of the divorce process?

Thanks for any advice.

From memory (as I haven't got my usual tax books handy) - if you both sell it and he gives you the money then you won't be liable to capital gains tax (CGT) on your share but he may be, depending on his share of the gain and the duration he is deemed to have held the house. The basic calculation is that the period of occupation plus last 18 months (if not part of that occupation) is free of CGT. Since you have lived there for the duration of the ownership you won't have any CGT to pay. He may do as he has owned it for 5 years but only lived in it for 1, plus the last 18 months of deemed residence. That means 1/2 of the gain would be taxable on him although his annual exemption could be set against that.

However, I vaguely remember there being a rule about husband being deemed to take over wife's ownership and residence periods if they were married at the point of transfer and also living in the house. So it's possible that his overall ownership is deemed to be 10 years and he is deemed to have lived in the property for 6 years (I.e. From the point you got the house to the point he moved out), plus the last 18 months. This would mean 75% of his gain would be covered by tax relief and only 25% taxable. After the annual exemption this may not be much.

However, please check this with someone who knows the legislation and the circumstances of the ownership (and the amounts involved) as the above is just off the top of my head and about a part of the CGT legislation that doesn't come up very often.

Also, sorry if it sounds really complicated - I've tried to simplify but it's hard after you've had wine :)