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Sam
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Category: Tax
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I would like some advice on CGT. I separated from

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Hello
I would like some advice on CGT. I separated from my ex-wife in 2001. She would not agree to sell our matrimonial home. A year after separation I purchased a smaller property to live in (and I am still living there). I started Divorce proceedings in 2007 and they weren't complete until Feb 2010 (but we did not get to agreement on the matrimonial property. I started court proceedings to have her evicted from the property in 2012 as she would still not agree to sell. The court (after some time) granted authority for me to sell the property sharing the equity 50/50. She was finally evicted from the property in April 2015. I have finally sold the property and would like to put my share into my current house to reduce my mortgage. The marital home was never rented or occupied by anyone other than my ex wife from 2001 to 2015 and I had to continue paying the mortgage up until it was sold. We have owned the property since 1988. Could you advise if I have a CGT liability please.
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer (and former HMRC and now running my own accountancy business) I am afraid you do have a capital gain liability as since 2001 (ish) this ceased to be your main residence - as the rented property become so.And whilst HMRC would sympathise with the difficulties you failed getting your wife to agree the sale and her to move out - this has no bearing on the facts on which capital gains are considered. Unless you have a drawn up asset listing made legally in the tax year of separation would any extension of capital gains tax reliefs be considered. So you will have an exemption formed from 1988 to the date you vacated the property and also the last 18 months of ownership/total period of ownership x your half share of the gain (which represents the fact this was in joint names) And then first £11,000 would be tax free as this is the annual exemption allowance and capital gains tax due on any remining gain. The rate of capital gains is 18% or 28% or a mix of both and is determined by how much unused basic rate band you may have (so if you earn more than £43000 then all the gain will be at 28%) You should advise HMRC of this sale - and include in on a self assessment tax return after 05/04/2016 with any tax due payable no later than 31/01/2017 Let me know if you wish me to expand further Thanks Sam
Customer: replied 1 year ago.
Hello Sam
Thanks. Just a couple more details - I purchase the house I now live in in Sept 2002, I lived in a 1 room bedsit for a year and a bit from circa Feb 2001 and I remarried in 2010. Is there any other relief I can apply to the case? The gain was £290k and there were £3500 worth of costs and a further £3000 legal fees which I had to cover.Also what is the implication of your sentence:So you will have an exemption formed from 1988 to the date you vacated the property and also the last 18 months of ownership/total period of ownership x your half share of the gain (which represents the fact this was in joint names)"I'm not sure how that exemption would work.Eric
Expert:  Sam replied 1 year ago.
HI Eric Thanks for your response and the additional information These additional details have no bearing on my answer - I have advised what relief you will be due and why no further reliefs are due. The sentence you were not sure of basically means - of the total gain after all costs are taken into account an half of this gain considered for your half share of the property so (simple example) if the gain was £50,000 then your half share would be £25000 and if you lived somewhere 120 months out of 240 months - then 120/240 x £25000 would establish the private residence relief (exemption from capital gains) - £12500 and when deducted from £25000 gain then In this example then £12500 would be the remaining gain to consider on which the annual exemption allowance would be applied - so less £11,000 then leaving a final gain of £1,500 to charge tax on. Thanks Sam
Customer: replied 1 year ago.
Hello SamThank you. Very helpful.
Expert:  Sam replied 1 year ago.
Hi Eric You are very welcome - Im only sorry there is no additional relief due. Please do take the time to rate the level of service you feel I ahve provided Thanks Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13712
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 1 year ago.
Sam - sorry - one last question if I may. If I have not used my CGT allowance in the last several years - can I use any years that I haven't claimed?
Expert:  Sam replied 1 year ago.
Hi Thanks for your further question I afraid its use it or lose it with all allowances - so there is only the one allocated amount for each tax year - as advised - just £11,000 (2014/2015) increased to £11,100 for 2015/2016 Thanks Sam

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