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 bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3394
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

Capital gains question regarding property Bought property

Resolved Question:

Capital gains question regarding property
Bought property in join names of husband and in 2004 £144k
Got divorced in 2008 property transferred to husband sole name property value £150kLived in property full time.
Husband remarried in 2008 gave property to new wife who took out new mortgage property value £175k
Both remained in property as main home until November 2011 when moved away.
Rented out from 2011 until date.
Wife Looking to sell property, sale price expected to achieve what do I pay cgt on?
Submitted: 11 months ago.
Category: Tax
Expert:  bigduckontax replied 11 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to ba able to help you with your question. Your question is a tad confusing, I assume that you are the husband. Your first wife transferred her sole or main domestic residence, the property jointly owned with your then husband, on divorce. Private Residence Relief (PRR) applies to this disposal and relieves any gain at 100%. She has no Capital Gains tax (CGT) liability in this matter. Your second wife does have a CGT liability as the property was rented out for a relatively short period, but for the last 18 months she is deemed to be in residence even if this is not the case. Her total ownership time is say 96 months, rental period (allowing for the last 18) 35 months. Thus 35 / 96 [say 36.5%] of any gain is exposed to CGT. Deduct non cumulative Annual Exempt Amount (AEA) of 11.1K and Lettings Relief (LR) up to 40K depending on the rentals received and the remaining sum is taxable at 18% or 28% or a combination of the two rates depending on your second wife's income including the gain in the tax year of sale. Without quantitative data I cannot fully calculate the position. Mortgages are irrelevant in CGT computations. You would appear to have no CGT in this matter at all as you transferred your sole or main domestic residence to your new wife in 2008. I do hope that you find my reply of assistance.
Customer: replied 11 months ago.
Thank you, it's a slightly confusing one.Just to clarify a final point, what purchase price is used to calculate the gain, the original price in2004 ?
Expert:  bigduckontax replied 11 months ago.
Your second wife's CGT liability will be based on the current market value as at the date you transferred the property to her plus costs of transfer plus any improvements eg installation of double glazing, central hearing, extensions etc since, but not routine maintenance which can be used to offset rental income during the letting period. The selling price will be net of selling costs including advertising. The difference between the two is the gain subject to CGT as I told you in my original answer. I am sorry that it is so confusing, but CGT is not always easy to get one's head around, I do hope I have solved your conundrum. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3394
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 11 months ago.
Thank you great advice and clarity
Expert:  bigduckontax replied 11 months ago.
Thank you for your excellent support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions