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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4808
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After 25 years of marriage I was divorced in 1982. Under the

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After 25 years of marriage I was divorced in 1982. Under the terms of the divorce settlement my former wife had the right to live in the jointly owned property until her remarriage or further order of court, neither of which has happened. She has not paid anything to me for living in the property for 34 years!
She has now moved into a care home and the home will have to be sold to pay for her care.
It appears that I will have to pay capital gains tax on my half of the property, this seems totally unfair as I will lose out yet again, for something in which I had no choice.
A similar property in the same area sold for £25,000 in 1982 and it is on the market today for £220,000
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. As Benjamin Franklin once sagely observed in life there are but two certainties, death and taxes. You are quite correct in your surmise that on the sale of the jointly owned property you will be liable to Capital Gains Tax (CGT) on any gain made. Your total ownership time is 708 months. Your non occupation time was 408 less 18 = 390 (for the last 18 months you are deemed to be in residence even if this is not the case), . The proportion of the gain subject to CGT is 390 / 708 = say 55.08%. From your figures you have a gain of 195K, divide by 2, 97.5K each. As it was her sole or main domestic residence she receives Private Resident Relief (PRR) at 100%. You only get PRR for 25 years. 55% odd of 97.5 is say 53.6K which is taxed at 18% or 28% or a combination of the two rates depending your income including the gain in the tax year of disposal From this you can deduct your non cumulative Annual Exempt Amount of 11.1K leaving 45.525K exposed to tax. Worst case scenario is a tax bill of 11.9K. Don't be too disheartened. I handles a case where a man had bought a house for his son at uni and kept it in his own name. When it was eventually sold up he incurred a CGT bill of some 29K, ouch.. The gain is the difference between acquisition cost and net selling cost ie after deduction of selling costs. The acquisition price is the purchase price plus purchase costs including Stamp Duty, improvements eg installation of double glazing, central heating, extensions etc but not routine maintenance. I am so sorry to have to rain on your parade.