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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Me and my husband are getting a divorce. We have two property's,

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Me and my husband are getting a divorce. We have two property's, I might have to down size,the two property's are adjoining. We split our marital home, to make it into two, if I go and live in the rented house and my husband has the marital home. What capital gain tax as to be paid and if so which one of us will have to pay it
The marital property was 255 thousand when we bought it, it is now worth 250 thousand.
The property we built is worth 210 thousand.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Here are some guidelines on CGT when transfer of assets take place in the year of permanent separation..

There is no CGT payable if one party transfers his/her share in the matromonial home to the other as part of financial settlement...provided the property was used as main residence.

The property that was not your main residence albeit it is adjoining property, would attract CGT on eventual sale. If the property is transferred to the other partner as part of financial settlement then the transfer itself would be tax neutral ie. share transferred at no gain or loss.

More information on who husbands and wives are treated for CGT can be found on HMRC helpsheet 281 here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323663/hs281.pdf

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.

So that means if I move into the property now

, now I will have to pay the tax later if I sell

Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply..

You could move into the property now and pay CGT when you sell it.

I hope this is helpful.
Customer: replied 1 year ago.

How much capital gains s tax.if the house is worth 210,000 now 20 percent on the full value?

Expert:  taxadvisor.uk replied 1 year ago.
Jack, before you can work out CGT payable one has to consider several factors.. eg

You are moving into a property that was rented before and becomes your main residence from the time you move in.

If you were to sell it at a future date, you would be able to claim
- private residence relief for all period the property is your main residence;
- further relief for last 18 months of ownership when you sell it whether you are living in it or not;
- letting relief upto a maximum of £40k as the property would have been main residence during period of ownership.

CGT is based on gain made against original cost.
Example -If your gain is £50k after all reliefs and allowances then this owuld be taxed at 18%, 28% or a combination of both depending on your total taxable income in the year of sale. worst scenario (50,000 x 28%) £14,000

I hope this is helpful
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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