How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 14700
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

I believe i face a cgt bill in connection with sale of the

This answer was rated:

Hi...i believe i face a cgt bill in connection with sale of the family home in connection with a divorce.
Assistant: What steps have you taken? Have you filed any papers in family court?
Customer: Yes. The divorce is close to conclusion. My solicitor has only just informed me about the potential liability. I had assumed the family home was exempt.
Assistant: Have you talked to a lawyer about this yet?
Customer: I understand the 3 year rule etc. But have 2 questions;
Assistant: Anything else you want the lawyer to know before I connect you?
Customer: Is the liability based on the entire value off the home or just the share i will receive as part of the divorce (40%)? And

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

Hi

Thanks for your patience

There is no longer a 3 year rule this is now reduced to 18 months |(so time you lived there and last 18 months)

And the gain is treated as your half share (so 50%) of the gain made between the date of sale and the date of purchase from which exemption is applied for the time you lived there and the alst 18 months

Thanks

Sam

Customer: replied 2 months ago.
Thanks... I'm not sure if the second part of the question had been removed? Can we deduct the cost of rebuilding the house? We bought the house for 200k, spent about 100k rebuilding and it will sell for about 400k.

HI

Why did the house need rebuiding? And did you live in it through this rebuild- and how long did you actually own this property and did you have other property you owned

Thanks

Sam

Customer: replied 2 months ago.
It was renovation and significant extension. Lived in throughout. I've owned the property 8 years but only lived there for the first 2. My ex wife still lives there. It will be sold this year as part of the divorce. I don't own another property. But live in a rented house.

Hi

Then you can have the costs of the rebuild deducted along with the purcahse price from the sale price - and you will then have 2 years/8 plus 18 months (so a total of 3.5/8) exemption for private residence relief

Thanks

Sam

Customer: replied 2 months ago.
Thank you. Sorry... one final point. Is proof of the rebuild costs required? I don't have receipts etc

Hi

Yes you have to have proof of all capital improvements so you will need to get these either from credit card or bank statements of you do now have the actual receipts or ask the businesses with whom you made purcahse from to check their archives of till rolls and accounts to provide you with duplicates

Thanks

Sam

Customer: replied 2 months ago.
Thank you... so if i get proof and the total 'profit' is £100k on the house. My share is 40%. So 40k. 3.5/8 is removed (44%). So 17.6k. The annual allowance of 12k It's removed. So 5.6k. × 28% = approx £1,500. Appreciate they're rough numbers but does that look correct?
Customer: replied 2 months ago.
Ah... no Would be 22k minus annual allowance. So 10k×28%...so approx £3k tax bill

Hi

NO your share is 50% as joint ownership

so £50K x 3.5/8 then leaves the amount liable

First £11700 is exempt if sold this tax year 2018/2019 and then what remains is liable to a mix of 18% and 28%

If a higher rate taxpayer then all at 28% if a basic rate taxpayer then any unused basic rate (from income tax) can be used to allow that equivalent amount of capital gain at 18% and then any remaining gain at 28%

let me know if you need any further assistance, or, it would be appreciated if you could rate me for the level of service I have provided

Thanks

Sam

Sam and 2 other Tax Specialists are ready to help you
Customer: replied 2 months ago.
Perfect thank you. Really appreciate the advice. Will rate now.