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Sam
Sam, Accountant
Category: Tax
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I am divorcing. The family home is in my husbands name but

Resolved Question:

I am divorcing. The family home is in my husbands name but this is the principle residence. We jointly own another property. This means I only have my name against one property. We don't go to court until October and separated last sept. My husband wants to keep the second property so will want me to transfer my interest in this on divorce but the family home will be sold. What ccg will I need to pay
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.

You will pay capital gains to pay on the transfer of the second home to his name as this was never your main residence. I appreciate that your name was not on the marital home, but husbands and wife can only have one main residence (which was the marital home) and since you separated you seem to indicate that you remain living in the marital home rather then the second property so you have no tax Lorelei due on this second home.

You could perhaps through the divorce settlement as for your husband to pay any gain that arises (or you end up having to actually find the money to pay this bill to HMRC)

Do let me know if I can assist further

Thanks

Sam

Customer: replied 1 year ago.
Difficult so will either of us pay ctg on the first home? And are you saying if he keeps the second property that I have to pay the tax bill from the proceeds of the first property even if he doesn't sell the second property?
Expert:  Sam replied 1 year ago.

Hi

You will not pay any Capital gains on the first home as your name is ***** ***** the deeds. Your former to be husband may well do if he no longer lives at the property and by the time the transfer is made (or sale ) if its been more than 18 months since he lived there then yes he will be liable to capital gains

I do not know what you are asking regarding paying for the second property??? What proceeds will you have the first property - I thought you were to stay living there ? Can you clarify - but if this is to be sold you will have no capital gains as indicated above on the marital home but will on the second home

Thanks

Sam

Customer: replied 1 year ago.
No the marital home will be sold but he wants to keep the second home. We currently both live in the marital home until the finances are agreed. What I don't understand is if I have proceeds from the sale of the marital home as part of the settlement but he doesn't sell to second home but has the deeds signed over to him will I need to pay ctg as part of the settlement or only if he sells it. Will this liability always be mine? Also how do I work out the ctg liability?
Thanks
Expert:  Sam replied 1 year ago.

Hi

Thanks for the clarification

So the sale of the marital home will not have a capital gain implication on you as you are not named on the deeds, but the transfer of the second home will have a capital gain implication on you as this is not the year of separation (so you can remain treated as a married couple thereby negating capital gains arising)

But you liability of capital gains on this second property will only be in consideration of 50% of any gain made.

Your soon to be ex husband again will have no capital gain arising on the sale of the marital home as its been his main residence throughout ownership but in the future if he sells the second home ( which is to be transferred from your joint names to his sole name) then he will also have a capital gain as he had a period of time from the date of sale to the date he makes it his main residence that a gain (chargeable) arises on it

If you wish me to work out the capital gain liability for you - then please advsie the purcahse price and the value at today's date - and whether you annual income is less than £43785 or more

Thanks

Sam

Expert:  Sam replied 1 year ago.

Hi

However you have given me a negative rating so perhaps you can advsie further

Thanks

Sam

Customer: replied 1 year ago.
Sorry I thought I only could ask one question and that didn't give me the answer also I thought I had to rate after each question but this is very helpful thanks. Purchase price £272000 and 50k alterations today's value £425000. Will now give this service an excellent rating thanks
Gill
Expert:  Sam replied 1 year ago.

Hi Gill

Thanks for the feedback re the negative rating and you dont need to rate until after you fully have your answer - and until I had established whether there was again I could not offer you any calculation (and these were all part of what your original question asked for)

So the gain assuming all the £50K alterations are allowable (they have to be capital improvements such as new kitchen, bathroom etc) we have a gain of £425,000 less £272,000 = £153,000 less £50,000 capital improvements = £193,000 half of which is your share so £51,500 (plus from this you can deduct half the costs to buy, such as legal fees, stamp duty etc)

The first £11,100 (that is this years annual exemption allowance) leaves £40.400

You have not advised your annual income position but worst case scenario where it is all liable at the higher rate 28%) = £11.312 capital gains tax due to HMRC

Let me know if I can assist further, and a furtehr rating would be very much appreciated

Thanks

Sam

Customer: replied 1 year ago.
Annual income paye is k25000 pa. husbands is an accountant hence all the questions
Thanks
Expert:  Sam replied 1 year ago.

Hi

Then of the £25,000 income and the first £11,000 is tax free - you have then used £14,000 of the basic arte band (there is £32,000 available)

So this means you have unused £18,000

So with the capital gain which we established was approx £40,400 (although this had not taken into account the costs to buy) then first £18,000 will be liable at 18% capital gain rate = £3240 and the remaining £22,400 at 28% = £6272

So your capital gains tax will be £9512

Let me know if I can assist further

Thanks

Sam

Customer: replied 1 year ago.
Many thanks will think and come back or rate brilliant help
Expert:  Sam replied 1 year ago.

Hi

Thanks please note that you can still come back after you have rated (as you have seen from your originally rating) as long as its part of the original question

Thanks

Sam

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