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Sam, Accountant
Category: Tax
Satisfied Customers: 14155
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My wife and I are separating, and are selling our house in

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My wife and I are separating, and are selling our house in order to buy one each. It is all perfectly amicable and we are still the best of friends, but what are the tax implications of doing this? We will eventually get divorced, but for tax purposes does it make any difference when we do that ? I'd heard that just living apart has capital gains tax implications if later one or other of us wants to sell their new house?
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.This is fine as you are separating, so as long as the current marital home is sold with you both living in it OR within 18 months of either of you vacating it, then with this sale there is no capital gains ANDwith each of your separate purchases, as long as these properties become your main residence for the whole period from purchase to sale, then again no capital gain will arise. So for tax purposes the fact that a divorce may not take place for some time, makes no difference unless you have other jointly held assets that could give rise to capital gains (such as shares or other property ) Let me know if you require any further assistance Thanks Sam
Customer: replied 2 years ago.

Thanks Sam,

I thought though that as a couple you had to specify a single residence as your main home ?

My tax is taken via PAYE and my wife is self employed and completes her own tax return.

All we want to do is sell the house split the funds 50/50 and each of us go and buy our own house, which will then be our own individual main residences. We don't want to suddenly 10 years down the line come to sell one only to find a huge tax bill !

Hi Thanks for your response NO - as your legally separation over rides that factor - (you would only need to do this if you were still a married couple - which from the date of separation you will not be treated as by HMRC) The issue only ever arises when one of the separated individual moves out of what had been the marital home and buys/rents elsewhere and then the divorce deals with the full asset division a year later (after the tax year of separation) at which point, whether the property is sold or transferred to the remaining spouse, then a capital gain arises, and this creates a cost to the individual who has moved out. So HMRC do advise that any asset division likely to take place AFTER that tax year of separation should be drawn up within an asset division document by a solicitor - to make it legally binding at the time of seperation.But in you case, your joint asset )the marital home) will remain each of your main resilience until such time you move out (which will be at the point of sale) then each of you will make your own purchase of your own main residences, and each of your positions has NO impact on each other, as you are legally separated and will jut each have your own home as separate entities (rather than a married entity) And what you propose is acceptable (and my advise comes from working for HMRC for 26 years and having full current and past knowledge of capital gains among other tax regimes) If you wished to safe guard any remaining concerns you have - you could ask a solicitor to draw up a legal document citing the official date of your separation, but you life styles and postal addresses for banks, utilities, council tax and own personal possessions will remain with each of you, which is evidence enough that you live separate lives. Let me know if I can assist any further, but it would be very much appreciated if you would rate the level of service I have provided to you Thanks Sam
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