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In the process of a divorce, we owned a house together and we both lived there, I moved out over a year ago and also during that time 6 months later after i moved out I bought a new house. I have agreed for her to have the house and will sign it over but I will have a legal charge on the house will I be due any capital gains taxes on it?
the matrimonial home has been owned jointly for approx 7 years. I moved out over a year ago and six month late bought myself a house to live in. So matrimonial house she will have this but there is a legal charge with the following condition for exercise the charge
a) the youngest child attain the age of 18 or complete secondary education whichever shall be later or b) the death of the petitioner or c) the remarriage or cohabitation d) the sale of the property by the petitioner. when the charge is exercise I will only get the agreed 35% of the sale. I know capital taxes like will have to be pay but I'm hoping when the property is sold and not at the start of the agreement . Can you also give me an example of how capital gain taxes would be calculated since it jointly own like how much of the profit would be subject to capital gain tax, would the profit be split half and my half taxed. Thanks in advance
Hi again.Take a look at paragraphs 3.5 to 3.5.1 here. So long as you don't elect for your new property to be treated as your main home and you transfer the marital property to your wife then you can avoid Capital Gains Tax on that part of the gain not covered by the period that you lived in it plus the last 18 months of ownership which will be exempt in any event. If you look at paragraph 3.5.1, it refers to Mesher Orders. As you are entering into an agreement with your wife for the property to be sold on the occurrence of one of a number of a certain events, it appears you will have a Mesher Order in place. These can mitigate your potential CGT exposure. If it is done properly and you take the right advice from a divorce lawyer, you may avoid having to pay CGT on the 35% sale proceeds you will receive especially if that is under a court order. Take a look at CG65376 here and at CG65377 here.I hope this helps but let me know if you have any further questions.
How do you elect your home as your main residence
i think it a bit late as it now been agreed.
i think it looks like a Mesher order so my question will capital gains be due when the charge is exercised and the property is sold or can it be due before?
can you confirm that the tax is only on the gain and nothing else?
so if the profit from the sale in the future is £40000 and I have only 35% how much of the profit will be subject to capital gain will that only be 35% of 40000 =14000. So 14000 of my share will be only subject to capital gain tax at either 18% or 28%
What is the election? I don't understand.
So even those I have not been living in the other house since just over year I can election for that one to be treated as my main residence. Is there a form that I need fill in for this