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As part of a divorce settlement my husband has agreed that

Customer Question

As part of a divorce settlement my husband has agreed that we will transfer ownership of a letting property solely into my name. We have never lived in it. What are the implications for capital gains?

The value of the house is apprpoximately 70k
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

Your husband will be liable for Capital Gains Tax (CGT), purely because you have never lived in it. If it has been rented out then there may be Lettings Relief available. Also the last 3 years of ownership don't count (until 5 April), 18 months (after 6 April), nor does the year of sale count. The gain is then adjusted for these time allowances and the tax assessed. Lettings Relief is then applied and there is an annual exemption of GBP 11900. The balance is then liable to CGT. You receive the property at the market value as at the date of transfer. The CGT process starts all over again for you pending ultimate disposal.

You should take the advice of your solicitor handling the divorce in this matter. It is part and parcel of his responsibilities.

I do hope I have thrown some light on the matter.
Customer: replied 2 years ago.

Keith


 


Thanks for that - I don't understand why my husband would be liable for capital gains rather than me, because we are transferring his share to me and not my share to him.


 


Is it because he is effectively disposing of his share?


 


The property is now worth less than we bought it for, so does this mean that there will be no capital gains to pay if he were to transfer his share to me?


 


 


 


 


 

Expert:  bigduckontax replied 2 years ago.
The possibility of CGT arises because a property owned and rented out is being disposed of as far as your husband is concerned. If the current value is less than the acquisition price there will be no liability to CGT.

bigduckontax, Accountant
Category: Tax
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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