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Sam
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Category: Tax
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My husband and I separated in March 2014 but continued to

Resolved Question:

My husband and I separated in March 2014 but continued to live in the same house. This was not a legal arrangement but purely personal. It is not our intention to divorce unless in the future either of us wish to remarry.
The house was put up for sale with an estate agent in Sept 2015 but to date has not sold.
I left the marital home in January 2016 when my mother gifted me money to buy a house in my own name.
When the marital home does eventually sell will I be liable for capital gains tax?
Also is divorce the solution to make the financial implications less complicated ?
Submitted: 8 months ago.
Category: Tax
Expert:  Sam replied 8 months ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

As you left the marital home in Jan 2016 you have until Sept 2017 before a capital gain position would arise - as private residence relief allows the time you lived there and if you move out, also the last 18 months of ownership within its rules.

Divorce has no bearing nor does separation, its all based on your movements in and out of the property on your share of any profit.

If it does not sell within 18 months, then you will have a capital gain but the time you lived there plus the last 18 months of ownership will form an exemption/total period of ownership

Plus you will have half the costs to buy and sell to offset against any gain and half the costs of any capital improvements and finally the first £11,100 is tax free as this is the annual exemption.

However ideally you either want a sale or you soon to be ex to perhaps purcahse your half share before Sept 2017

Do let me know if I can assist further

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13808
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
Thanks Sam
Just to clarify...the house was valued at £500 k. If it doesn't sell within the 18 months exemption period but say for example sells after 2 years at a reduced price of £475 k would that be the figure for calculating if I was liable for tax ? Who does the valuation for the property in this situation ? Is the value the price we are able to sell at ??? As it's highly unlikely that we would increase the price then am I right in thinking that capital gains won't be due ?
Alizon
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response

The figure for calculating will be the market value of the property ( if this differs a lot from the actual sale value)

The valuation is taken by the estate agents who market the property for you - and as you have not provided the purcahse value, I cannot confirm whether capital gains would or would not arise, if you were to sell more than 18 months after you have ceased to live there.

Thanks

Sam

Customer: replied 8 months ago.
The house was bought in 2001 for £260k. I lived there ,and it was my sole property , until Jan 2016 when it was being marketed for £500k . Is the capital gains figure potentially £240 k ? And as this figure is a separation settlement only 50% is due to me does that make the figure £120 less costs ?
Expert:  Sam replied 8 months ago.

Hi

If the value at sale is £500K and you purchased for £260K - then the gain will be £240K of which £120K is yours to consider less costs and reliefs for he time it was your main residence and of course if anything is left over then the first £11,100 of this final figure is also exempt.

Thanks

Sam

Customer: replied 8 months ago.
Thanks for your reply Sam. Probably not what I wanted to hear but best to know !
Alizon
Expert:  Sam replied 8 months ago.

Hi

The sooner you sell after the 18 months the small the gain will be as with all the reliefs due at that time (the time you lived there plus the last 18 months of ownership) the gain then that accrues will not be too vast (plus only 50% of iy ots considered on you!)

Thanks

Sam

Customer: replied 8 months ago.
Ahhh , have I misunderstood ? Am I really only concerned with the gain from Jan 2016 to when I sell ?
Expert:  Sam replied 8 months ago.

Hi

The gain is calculated as if has accrued over the whole period, but when your tax reliefs are allocated (the time you lived there ans the last 18 months of ownership) then your gain should remain smallish.

I can do a calculation for you - if you would put your mind more at rest - on the basis that the property is sold , say Aug 2018 with about the same value (£500K) but I would have to offer this as an additional service I am afraid (as per Just Answer policy) so an additional charge would arise - let me know if you wish to proceed, or I can offer you a telephone service (again additional charge I am afraid - but I am in the UK!)

Thanks

Sam

Customer: replied 8 months ago.
Thanks Sam , I think to put my mind at rest I would like you to do a calculation for me . I understand there is an additional charge. Would by telephone be easiest ?
Expert:  Sam replied 8 months ago.

Hi

Whatever suits you - but it would be easiest so I shall send a request through now

Thanks

Sam

Customer: replied 8 months ago.
I've accepted the offer of a phone call , do I just dial the number now? ?
Expert:  Sam replied 8 months ago.

Hi

Yes - thats it!

Sam

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