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bigduckontax
bigduckontax, Accountant
Category: Tax
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What have separated from my ex partner and no longer live in

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What have separated from my ex partner and no longer live in the house. He is taking over the mortgage and paying me part of the equity upon remortgage (imminent) and there will be a 2nd charge on the property in my name for the balance of the equity. This will be repaid by him over five years with some interest.
Assistant: Have you talked to a tax professional about this?
Customer: What might my tax liabilities be?
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: No, not yet.

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

 

You will be liable for Income Tax (IT) on the interest received, but remember that the first 1K of interest received is tax free.

Customer: replied 4 days ago.
Thank you; will the capital amounts (noting that I will not longer be on the mortgage after the remortgage) be liable? I moved out in 2015 and remortgage will be this year. 2nd charge amount of £72k to be paid over five years

Not if the transaction is in the tax year of separation.

bigduckontax and other Tax Specialists are ready to help you

I would love to talk, but from long experience I think you will find it easier to ring me, I am on 01750 725420.

Customer: replied 4 days ago.
Thanks again for your time.

The remortgage is based on a valuation of £595k

My income is £138,950 per annum and have no other income.
Customer: replied 4 days ago.
The proposal was for the 2nd charge amount of £72k to be spread over five years with an interest of 1.25% pa

What was the value when you vacated 3 years ago?

Customer: replied 4 days ago.
Halifax price index says it’s 4% lower today that it was then

That gives a value of say 571K and a notional gain of 24K. Now deduct the Annual Exempt Amount (AEA) of 12K leaves 12K exposed to the tax at 28% so your tax bill would be a tad under 3.5K.

 

Thank you for your support.

Customer: replied 4 days ago.
Thank you. Final question, I think!

Timeline:

Our value of house in 2007 was 380k.

Lived together until tax year of 2015/16

CGT liability will be on increase (if any) in value between time of separation and remortgage valuation point, yes? With CGT liability in the year that I come off the mortgage (next month) and payable in the normal timelines via Self Assessment?

Thanks.

Correct!

 

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 4 days ago.
Rated and tipped. Thank you.

Thank you for your excellent support.