Capital gains tax question

[StripeyKnickersSpottySocks]

My parents are divorcing and have a house to sell. My dad has moved out and is renting but he has enough savings to buy a small house and is thinking of doing this.

But mum reckons if he does this when the old family home is sold he will get hit for capital gains tax as it will be classed as his second property.

Is this right?

Thanks.

Not if he has lived there until fairly recently as his main residence. Can't remember the exact timings but within 3years rings a bell.

if you have ever lived in a property then for the last 3 years that you own it, your are exempt for CGT.
So if it sells within 3 years there won't be a problem.

No idea if there are any specific divorce exemptions.

Ah, he moved out 2 and a half years ago. Its taking ages to sell.

him buying another property isn't relevant I don't think. It hasn't been his principal private residence since he moved out.
Would be relatively small CGT.
Example:
Owned house 15 years in total.
Not lived in for last 5 years
taxable gain = (5-3)/15 ie 2/15th of the actual gain.
Then annual exemption (approx £9k atm)

Well the house has gone up by nearly 200k since they bought it 12 years ago. So his share of the profit will be about 90k. So he'll have to pay a 1/12th of that? Which would be less than 9k and he'll get an exemption of 9k so wouldn't have to pay anything????

pretty much - although if they sell within 6mo that's still within the 3yo exemption, and after that the 12 years is increasing so the proportion might by 1/13, 2/14 etc.
The sooner they sell the better for this purpose.
Also assumes no other capital gains.
Can he transfer the house to your mother now? That way there would be no capital gains.

I don't think mum would go for that, if they don't sell the house for as much as they're hoping then she would worry that she'd given dad too much money and he that he wouldn't give her any difference back. Its not been very amicable.

Thanks for the info.

I was more thinking about transfer it now and then he has half the profit when it sells.
Probably not going to happen - but would be to his advantage, othwise she gets half the cash no tax, he gets half the cash but potentially has to pay some tax.

Its worth talking to them about it, he may not trust her enough though either.