How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15917
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

I am not living with my wife but am in regular contact in person

Resolved Question:

i am not living with my wife but am in regular contact in person and by phone. i visit the matrimonial home at least twice a month
we have two children whom are not dependant aged 32 & 34, living away from the home
the property is joint tenancy
i am considering buying another house with my new partner (my wife is fully aware of the situation) in tenancy in common with life interest trusts in our wills
Rather than getting divorce i wish to give my share of the matrimonial home to my wife relying on the inter spouse transfer of asset tax exemptions
would it be preferable to gift the property share without payment, or divorce
Submitted: 1 year ago.
Category: Tax
Expert:  ukfamilysolicitor replied 1 year ago.
Hello
Welcome to Just Answer
Thank you for your question.
If you decide to gift the property to your wife rather than go through divorce and dealing with the financial aspects in full and final settlement - the you have to be aware that your wife could at any point in the future still make a claim against you. If it is intended that the transfer will be in full and final settlement of her future claims against you then you should deal with the divorce and submit a consent order to the court so that a further claim cant be made in the future.
The correct process for dealing with the matrimonial finances and division is to go through a process known as full and frank financial disclosure. Yourself and your husband need to exchange full details of all assets ( including pensions) and liabilities before negotiations take place in relation to settlement.
The normal rule for division is 50/50 however the matrimonial causes act sets out factors which could lead to a departure from this rule. A few examples are the likely earning capacity of both of you for the future, health needs etc. Everything is included in disclosure.
You should consider making a referral to a specialist mediation service. They can assist in relation to the process of disclosure and also in relation to negotiations about division. One such mediation service is the National Family Mediation service. www.nfm.org.uk
If agreement cannot be reached then an application would need to be made to the court. You can not make an application to the court until you have at least attempted mediation first.
It is very important that no division of any assets takes place until a court order is obtained.
If division is agreed without the need to apply to court then you should submit a consent order for Judicial approval prior to division and obtaining decree absolute. Not doing so could leave you open for a future claim. A Solicitor can help you draft the Consent Order to protect your position for the future.
Kind Regards
Caroline
I would be grateful if you could kindly rate my answer. I am new to this service and positive feedback is gratefully received. Please note that we receive no credit for our work and we do not get paid unless positive feedback is received.
Customer: replied 1 year ago.

You have not answered my question

I am not concerned with the mechanics of divorce, my wife and i are in agreement for this settlement that she keeps the house

I need to know what if any implications there are in respect of the property gift ie capital gains tax, if so how is this calculated

You have missed the point of my question

If you are unable to answer please refund my money immediately

You have mertely quoted the basis of divorce which was NOT my question

Expert:  ukfamilysolicitor replied 1 year ago.
Hello
Thank you for your response.
I was concerned in relation to a future claim being made against you. Thank you for clarifying for me. I will request that your question is transferred to the Tax experts so that yo can get the help that you needs.
Kind Regards
Caroline
Customer: replied 1 year ago.

when will i receive an answer from the tax experts

or refund my money

you have not answered my question

Expert:  ukfamilysolicitor replied 1 year ago.
Hello
I have already submitted a request for you that you category be changed to 'Tax'. Hopefully an expert will respond shortly.
Kind Regards
Caroline
Customer: replied 1 year ago.

i cant rate this until i receive a satisfactory answer

Expert:  TonyTax replied 1 year ago.
Hi.

Can you tell me if you have owned another property since you moved out of the matrimonial home please.
Customer: replied 1 year ago.
No
Customer: replied 1 year ago.

No other property

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 1 year ago.

ok thanks

Expert:  TonyTax replied 1 year ago.
Hi again.

Take a look at the notes here for some guidance on the CGT implications of marriage breakdown.

Gifts made to spouses after the end of the tax year in which separation occurs are not treated as having been made on a no gain no loss basis as they would be where the transfer occurred in the tax year of separation or during the marriage itself where separation or divorce is not an issue.

As you do not own another home, you could gift your share of the matrimonial home to your wife as part of a divorce settlement or outside of such a settlement and make a claim for relief under Section 225B Taxation of Chargeable Gains Act 1992 for the property to be treated as your main home as if you have never left, thereby making any paper "gain" exempt from Capital Gains Tax. Take a look at CG65536 here for more information.

I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.

Thank you we are starting to get there, but still not answered fully

The point is i want to gift before the end of this tax year, we only separated in may having an on off relationship for years

re an other property i inherited my parents house 1n 1998 but this used partly as my home but also used the matrimomial home

My question again, i wish to avoid divorce as i have a close friendship with my wife and she has agreed the house is adequate settlement so i want to gift it her as i am buying another house on a tenancy in common basis with someone else

In normal circumstances transfers between spouses should/was an exempt transfer for CGT and IHT but i need to known in view of dates of the proposed transfers that NO CGT would be applicable

In any event if there are no disposals how would a tax charge be calculated

I appreciate this is not an easy question

points

i wish to avoid divorce

i wish to gift my share of the matrimonial home

i do not want to pay CGT (but how is it/would it be calculated)

Any transactions would be before next tax year

i have a property inherited used as a holiday home NOT let out

any implications should i do nothing and leave matrimonial home as joint tenancy obviously survivorship rules would apply

Expert:  TonyTax replied 1 year ago.
I asked you if you owned another property and you replied that you didn't. Now you say that you inherited another property from your parents. I cannot help if I'm given inaccurate information. Do you still own that property? Would you consider it to be your main home.
What do you mean by " this used partly as my home but also used the matrimonial home"? You say that this property has been used as your home? When exactly? When were you married?
Customer: replied 1 year ago.

Apologies i thought you asked have you acquired another property since separated

I own the property in my sole name

I have spent time there without my wife periodically, but also been in the matrimonial home, it was my getaway retreat most men dont have the guts to do both

probably since 2009 until may 2015

married in 1975

Expert:  TonyTax replied 1 year ago.
Thanks.

Let me take another look in light of your new questions. It will take a while.
Customer: replied 1 year ago.

Sorry to be a pest

i appreciate the whole scenario is unusual

I want to do the best for everyone, i think an inter spouse transfer should be ok if completed before the next tax year, but i am nervous of the Revenue at a later date

If we get divorced could the house go to her without tax, i appreciate the other risks of potential claims, which are unlikely as we are still very close but just not dont want to live together all the time

Expert:  TonyTax replied 1 year ago.
I'm working on it all now.
Customer: replied 1 year ago.

thank you

Expert:  TonyTax replied 1 year ago.

Hi again.

As you only separated in May, your best bet would be to give your wife your share of the matrimonial home by 5 April 2016. As we are still in the tax year of separation, any transfer will be exempt from CGT, ie no gain, no loss. There would be no complication with HMRC.

Any other arrangement has complications and can give rise to tax liabilities. The option outlined in this paragraph is even preferable to the Section 225B claim which can cause you to lose main residence relief on a property which has become your main home, ie the inherited property. In fact, so long as you dispose of your interest in the matrimonial home within 18 months of moving out of the property, your "gain" would be fully exempt from CGT.

As I said above, any other arrangement can be complicated. Take a look at CG22423 here and at CG22500 here for what the tax implications would be if a court order was made or if divorce proceedings took place. Basically, you would be treated as having "sold" your share of the property to your wife at the open market value and that would have CGT implications for you. You would of course qualify for main residence relief for the period that you lived in the property and for the last 18 months of your having a share of its ownership which would dilute the taxable gain somewhat and you would qualify for exemption for the first £11,100 (at current rates) of the total gains you make in any one tax year.

If you do nothing and retain your ownership of the matrimonial property, then you will build up a gain which won't be exempt from CGT when you do decide to sell it. Section 225B relief won't be available as you will probably have another home which you would class as your main home and that you would want to protect from CGT.

Take a look at HS283 here for information on how a gain made on a home which has been the main home is split between the taxable and the non-taxable parts. The gain is treated as having accrued evenly and time apportioned between the tax free periods and the taxable periods.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15917
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

If i gift the property to my wife do i need to advise HMRC I will be changing my address later in the year. I will still have a close relationship with my wife

My tax return for 2014/2015 will show the old address but 2015/2016 return will have a new address, is this sufficient

How is the gift completed, can it be done on line without a solicitor, or down load forms from Land registry

Expert:  TonyTax replied 1 year ago.
If you do it in the current tax year, I would mention it in the white space on the 2015/16 tax return. It is technically a disposal but most people don't report it as such especially if they don't complete annual tax returns.

If there is a mortgage in excess of £125,000 which your wife is taking on from you (in addition to her share of a mortgage) then there will be stamp duty to pay.

I would use a solicitor to manage the transfer and to do the paperwork but I believe it can be done by using forms without a solicitor from the Land Registry.
Customer: replied 1 year ago.

thanks Tony

For my 2015/2016 tax return my address will be different as i am hoping to buy another property my wife retains the old matrimonial home, no mortgage,we will still be married, and still in close contact as before,(see original text) The tax return designation will be 'Married'/separated?

Am i correct that to be living together definition you dont have to be in tha same house all the time

do we need to make elections for separate PPR homes, or do the revenue assume that from the tax return.

My wife doesnt complete tax returns

I have sanction from HMRC to act as her tax adviser

I feel i am being made to jump through hoops to justify a gift to my wife at no benefit to me where we have spent a life time to build up enough assets to have a reasonable life,

I will have to pay CGT on my inherited property surely the revenue cant justify taxing individuals twice

I know when i die CGT is washed out perhaps this is the answer

Expert:  TonyTax replied 1 year ago.

If you are separated as at 5 April 2016, that is what you put in the tax return in the white space at the end.

Forget your wife's tax position. She only has an interest in one property which she lives in so its her main home by default. A married couple who are living together can only have one main residence between them. The property has clearly been your main home and you are out of date to make an election in any event.

Many couples go through this process. That's life. Financial actions such as property transfer have consequences. Anything else leads to chaos.

Where is twice the taxation?. Your inherited property is not your main home, therefore any gain will be taxable. If it becomes your main home, you will get some main residence relief.

I have nieces and nephews who will never buy a property because of the ludicrous property prices in the UK which has manly been caused by buy to let. I count myself lucky.

Customer: replied 1 year ago.

Many thanks Tony

Excellent service

regards

phil

ps dont panic but no doubt i will be back

im an IFA so i can appreciate the possible frustration with some clients im going through it with Pensions Freedom!!

Expert:  TonyTax replied 1 year ago.

Thanks.

I can't wait to see how many people blow their pension funds on cars and holidays.

You should have no problems with HMRC. So many married couples don't get organised in time and have tax problems as a consequence.

Related Tax Questions