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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5147
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Dear Sirs, I am going through a divorce and will be

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Dear Sirs, I am going through a divorce and will be transferring my share of the matrimonial house to my ex wife for the sake of the children so that she is the sole owner of the property. The property is currently in both our names, the value of the property is £625,000 and the remaining mortgage is £375,000.
Would I be liable to capital gains tax in this instance?
I look forward to hearing from you in due course.
Inderjit Bains.

Thank you for your question.

The rules governing CGT when there is separation/divorce are as follows (helpsheet HS281)

If you or your spouse or civil partner were living together at some time in a tax year, you can transfer assets between you at any time in that tax year at no gain/no loss. There’s no requirement that you should be living together at the time of transfer.

More information on this can be found here

If you move out of the matrimonial house and transfer your share to your ex wife, any gain on your share would be exempt from CGT as it would be covered by private residence relief in two ways -

the period it was your main residence plus final 18 months of ownership.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
Thank you for your response. I do have a couple of supplementary questions on the same topic following your response as follows:1) the period it was your main residence - it was purchased by both parties in 2009 and remained the family home until we separated but not yet divorced, only decree nisi issued. Only I moved out and the family remained to stay there.2) plus final 18 months of ownership. If I moved out in May 2014 but the assest had not yet been transferred would I still be laible to CGT although an informal agreement had been made between both parties?I look forward to hearing from you shortly.Thanks,Inderjit.

Thank you for your reply.

You moved out of the property in May 2014...the period to Nov 2015 is covered by private residence relief.

Any period Nov 2015 would fall under changeable gain.. say the property is sold in Nov 2016..then 12 months out of a total of 84 months (assuming property purchased in Nov 2009) would be chargeable gain

if the gain is £200k, your share is £100k and the chargeable element is (100,000/7) £14,285. Your gains allowance is £11,100 and you would CGT on £3,285.

I hope all is helpful.

Customer: replied 1 year ago.
One final question, if the property is not sold just being transferred from joint names into the sole name, does CGT still apply?

Thank you for your reply.

A transfer from joint name to a sole name is ***** ***** sale for CGT purposes.

Transfers between spouses are tax neutral but in your case, there is likely to be a small capital gain tax liability.

I hope this is helpful and answers your question.

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