No. No election was made.
To be honest I'm not au fait with tax matters so it wouldn't have even occurred to us.
Now, I can see all this could have been avoided if we put the house in her name and the flat in mine when we separated.
Hi again.I'm afraid that there may be nothing you can do to avoid your wife having a CGT liability on her share of the gain (but see below). I have to say it is unusual for a husband who has moved out of the marital home to buy another property in joint names with his wife from whom he is separated.The gain will be £60,000 less the expenses of buying and selling (legal fees, survey fees, selling agent fees, stamp duty etc.). That's £30,000 for each of you and your wife. If you sell after 5 April 2014, the first £11,000 of her share of the gain will be exempt so that will leave her with a net taxable gain of £19,000. Your share of the gain will be exempt.There are two rates of CGT, 18% and 28%. The rate or combination if rates that your wife will pay will be dependent on the level of her income in the tax year of disposal of the property. So, the CGT could be anywhere between £3,420 and £5,320.Since you haven't made an election, you are going to face a similar problem if and when the property your wife lives in is sold, only this time it will be you with the CGT liability. There may, however, be light at the end of the tunnel. There is a piece of legislation, Section 248A to 248E Taxation of Chargeable Gains Act 1992, whereby two joint owners of two properties who live in one or the other can give up their interest in the property they don't live in and claim relief from CGT so long as no money changes hands. This may be a problem where the properties concerned have differing levels of equity. You can read about the relief here, here, here and here. I've not read anything to suggest that separated couples cannot benefit from this relief (asset exchanges following the end of the tax year in which separation occurs are usually done at market value for CGT purposes) and CG65160 alludes to that but I would suggest you consult a tax lawyer who specialises in marital law for clarification. There may also be a relief available if you actually divorce and an exchange of assets occurs as part of the financial settlement. Stamp Duty may be a problem if any cash does change hands.I hope this helps but let me know if you have any further questions.
Thank you, XXXXX XXXXX be very useful information :)
Can I ask, if we wanted to do the swap do we have to do anything other than use a conveyancer to change the titles ?
Do I need to contact HMRC ? fill in any forms etc ?
Is a conveyancor adequate to do the swap paperwork ?
My wife doesn't fill in a tax-return, will she have to to declare this transaction ?
You say "make a claim for the relief". Does this mean the money will be taken up front and we claim it back ?
Or the tax return is just a declaration of historical activity to tidy up the tax situation ?
Thank you very much. You have been very helpful :)