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Sam
Sam, Accountant
Category: Tax
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My ex wife and I bought our property in 1986 £56,000.

Resolved Question:

My ex wife and I bought our property in 1986 for around £56,000. It now estimated to be worth £505,000.We were divorced in 2002 and the court on a 70/30 split with my ex-wife getting the 70% I lived in rented accommodation until I bought a flat in 2007 for £180,000 on an interest only mortgage.I currently pay a mortgage of £630 per month..I lived in it until January 2010 since when I have let it and moved in with a friend. Will I have to pay capital gains tax on my share of the sale?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question - I am Sam and I am on one of the UK tax experts.
I am afraid the answer is yes, as you went on to buy a further property which became your main residence, (although I appreciate it is not now) and you can only have one main residence.
Had you remained in rented accommodation and the split had been legally recognised with papers drawn up from the tax year in which you separated (not the year of divorce) then there would have been consideration of your share of the sale being eligible for relief from capital gains.
As matters stand - you will get credit for the time you lived there plus the last 18 months of ownership/total period of ownership s your share of the gain.
The first £11,100 will be exempt from capital gains (as this is your annual exemption allowance) and the remaining gain will be liable to capital gains tax.
The rate is determined by your usual annual income. If in excess of £41785 a year then your gain will all be liable at 28%. If your annual income is less than £41785 - then some of the gain (the equivalent of the unused rate band) will be liable to 18% and the remaining gain at 28%.
You should declare this gain on the relevant self assessment tax return.
Let me know if I can be of any further assistance
Thanks
Sam
Customer: replied 2 years ago.

Thank you Sam.Would it make a difference if I sold the flat I now let or buy another property with the proceeds of the sale of the house?

Expert:  Sam replied 2 years ago.
Hi
Thanks for your response
None at all I am sorry to say as this is not a business asset so does not qualify for any roll over relief or additional considerations.
And the sale of the flat now, would not change what had been.
I wish there was someway this tax position could be mitigated but I am afraid the gain arises on the basis of what took place, and that,s what is looked at to determine the tax position.
But that aside, unless any agreement had been made (legally) in the tax year of separation then there still would always have been a capital gain consideration (exactly as arises now) for the sale of this ex marital home.
Let em know if you have any further questions, but it would be appreciated if you could rate me (or click accept) for the service I have provided.
Thanks
Sam
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