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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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My husband divorced his first wife 5 years ago. No financial

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My husband divorced his first wife 5 years ago. No financial settlement was made at that time. He now lives in my home which is solely in my name. The mortgage has now matured on the house he and his ex wife own. She still lives there. They have paid half the mortgage each. He wants to finalise the situation and is proposing to ask her for 25K in exchange for giving up any rights to the house. What would the tax implications be if he did this?Thankyou
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello and thank you for allowing me to assist you.
He would normally pay CGT on a sell to an ex-spouse after the date of the divorce. As this was his main home too he would be allowed Residence relief providing he never claimed any other residence since.
The amount of gain would need to be calculated (but unless his half of the property was less than the 25K he sells for, it is unlikely he will have any CGT.
You only pay tax on any gains made since 31 March 1982. So if he owned the house on 31 March 1982, he works out the gain or loss using its value at that date instead of its actual cost.
Customer: replied 3 years ago.
Thankyou for your reply.
He and his ex wife purchased the house in 1989 for £60,000. I estimate the present value to be about £170,000. Do these figures mean he is exempt from CGT? I look forward to your reply.
Expert:  TaxRobin replied 3 years ago.
No the value would not figure in because they purchased after 1982. His half of the £60,000 (£30,000) is his cost. His gain would be £5,000.
His allowance should make him exempt from CGT on the sale.
Customer: replied 3 years ago.
Thankyou so much for your help.
Expert:  TaxRobin replied 3 years ago.
You are most welcome.
My goal is to give you excellent service.
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