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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi ..im currently divorcing..i have 4 buy to let properties

Resolved Question:

Hi ..im currently divorcing..i have 4 buy to let properties all held in joint names ..i am a higher rate tax payer ..i applied for my divorce in tax year 2013 -2014 . However my divorce is not completed yet ..ive since been adviced i can still transfer 2 properties into my sole name and the other 2 into my wifes name aslong as its done before we divorce we avoid paying cgt ...is that correct even thou it is within a different tax year
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

If the exchange occurs in the tax year of separation, as defined on page 3 of HS281 here, there is no gain, no loss for either party.

If the exchange occurs after the end of the tax year in which separation occurs, the tax position depends on the stage at which you are in the divorce proceedings. If the transfer occurs before the Decree Absolute, then market value is used as you and your spouse are connected parties. If it occurs after Decree Absolute, then any gains are losses are based on the sums which exchange hands. Take a look here for more information.

As you are simply swapping joint interests in properties and there may be no cash involved, you can make a claim under Section 248 A - E Taxation of Chargeable Gains Act 1992 for a no gain, no loss situation to apply. There may be some CGT involved if a cash payment is made to equalise the exchange. Read about that here and here.

I hope this helps but let me know if you have any further questions.

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