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Sam
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I have a question regarding capital gains tax. My wife and

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HiI have a question regarding capital gains tax.My wife and her ex-husband used to own 5 properties together until their marriage ended. They ceased living together in December 2011 and signed the Consent Order to legally divorce in July 2012.One of these properties was a matrimonial home, whilst the other 4 were jointly owned for rental purposes.Upon separation, my wife received one property in the settlement, with her ex-husband receiving the other 4. In each case, the transferor’s financial and beneficial interest was 100% signed over to the transferee.He is now selling one of his properties and my wife is concerned there is some capital gains liability on her part, despite signing over the property over 5 years ago.Could you please tell me whether she would be liable for Capital Gains on the properties she transferred to her ex-husband... she has not gained anything financially and, in absolute terms, would technically be in negative equity compared to the benefits afforded to her ex-husband.Kind regards,
Andrew
Submitted: 28 days ago.
Category: Tax
Expert:  Sam replied 27 days ago.

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Expert:  Sam replied 27 days ago.

Hi Andrew

As the properties were not transferred in the tax year of separation capital gains should have been considered when the transfers took place (aside from the matrimonial home) so this sale now will not trigger a gain but the intial transfers back 5 years ago may have and this really needs visiting and rectifying as necessary

Let me know if I can assist further

Thanks

Sam

Customer: replied 27 days ago.
Thanks for your response, Sam.My wife had no legal representation throughout the divorce as she could not afford it. Surely the solicitor of the ex-husband would’ve advised her if capital gains was due?Having transferred 100% of the equity in the houses, my wife hasn’t gained anything... had she known capital gains would need paying, she would’ve arranged for sufficient funds to cover it to be taken from her share of the equity, transferring only the remaining equity to her ex-husband.Finally, they had a separation agreement drawn up in Feb 2012 stating the agreement for the dividing of the estate. This was signed during the same tax year as cohabitation ceased... surely this counts for something?Thanks again!
Andrew
Expert:  Sam replied 27 days ago.

Hi

Thanks for your response

Solicitors do not need to have tax expertise so its very likely that they would not know but she would need to ask her ex husband whether this was mentioned at the time -

Whether an actual monetary gain was made or not is irrelevant that e fact that properties were transferred triggers a gain so if any property has an increase in value between purchase and sale or transfer - then a gain HAS arisen. Only husbands and wife when married or in the tax year of separation can freely transfer properties without any capital gain consequence.

If they had legal paperwork detailing the transfer of assets in the same tax year of separation then IF all transfers were carried out as specified and drawn up under legal terms then it may be that the transfers would NOT fall under a capital gain consideration but these usually are created under

  • any decree absolute or dissolution of the civil partnership
  • the court order if the asset was transferred by such an order
  • any other contract under which the asset was transferred

So it may be that the properties transfers are covered by the third requirement - and more specifically the one property in your wifes name - but I could not say for sure so I do urge your wife to seek an appointment with a local accountant to clarify this once and for all - and they can review the document drawn up which you state took place in the same year that they separated

Link here re Separation Divorce and Capital Gains Helpsheet 281

https://www.gov.uk/government/publications/husband-and-wife-civil-partners-divorce-dissolution-and-separation-hs281-self-assessment-helpsheet/hs281-spouses-civil-partners-divorce-dissolution-and-separation-2016#year-of-permanent-separation

BUT the sale now will NOT trigger a capital gains as she ceased to be a legal owner 5 years ago so any gain on this sale will fall on her ex husband only

Let em know if I can assist further, or, if you have all that you need, it would be appreciated if you could rate me for the level of service I have provided or click accept

Thanks

Sam

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Customer: replied 27 days ago.
Thank you, ***** ***** is very helpful.I will reread the paperwork again tomorrow and perhaps be in touch again if needed. However, I will rate you now.Thanks again,
Andrew