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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 10253
Experience:  FCCA FCMA CGMA ACIS
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I am in the process of buying my husband out of the family

Customer Question

Hi there, I am in the process of buying my husband out of the family home as we are divorcing. My family is providing me with the capital to pay my husband out of the property. What are the tax implications in this instance? Thank you
JA: Have you talked to a tax professional about this?
Customer: No...
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: I dont think so, I am in the process of remortaging
Submitted: 15 days ago.
Category: Tax
Customer: replied 15 days ago.
The amount I will be paying him is £44,000
Expert:  bigduckontax replied 15 days ago.

are you buying your husband out in the tax year of separation?

Customer: replied 15 days ago.
we have only obtained the decree nisi so far, that came through in April 2020. We separated officially in December 2019
Customer: replied 15 days ago.
I will be applying for decree nisi once the equity release and remortgage have gone through, however I am not sure if the money I will receive from my family to help with paying him out is subject to taxation. It is meant to be a gift
Customer: replied 15 days ago.
aplogies, I will be applying for decree absolute once the equity release and remortgage have gone through
Expert:  bigduckontax replied 15 days ago.

You should live in Scotland where, providing no children =under 16are involved and financial arrangements made you can present a petition to the Sheriff Court in the morning and be divorced by tea time!

There will be a Capital Gains Tax (CGT) liability covering the period of ownership from the separation to disposal. As landed property values are deemed to rise or fall equally with time CGT is unlikely to be a p0roblem as the gain will be minimal..

Customer: replied 15 days ago.
hahah hopefully I will only divorce the once so that should save me on the move! ;)
Sorry by separation do you mean December 2019 till when the transfer of equity takes place? (hopefully this month)
Should I declare the money somewhere to check? Thank you!
Customer: replied 15 days ago.
I just don't want the money to land in my account and then HMRC goes psycho on me...! lol
Expert:  bigduckontax replied 15 days ago.

As I said the only danger is the period when you separated and the selling date.   As this is likely to be relatively short against the total ownership time the gain is likely to be under the Annual Exempt Amount (AEA) of 12.3K.

Customer: replied 15 days ago.
thank you, ***** ***** a bit confused, I have requested a call back, I can't really get this wrong! :)
Expert:  bigduckontax replied 15 days ago.

I am sorry I do not do telephone calls any more, they are no longer cost effective.

Customer: replied 15 days ago.
oh ok, not a problem, so just to get this right, we owned the property since 2015, we got married in 2016 and separated in 2019. Got decree nisi in April 2020. Buying him out this month for a fee of £44,000 as part of the financial agreement. These funds come from my dad and my uncle. Do I need to declare these anywhere? 12.3K is much lower than the 44K...
Customer: replied 15 days ago.
ehm...it took money out of the account for the phone call?
Customer: replied 15 days ago.
dont worry, money is getting refunded, however, if you could clarify on the query above that would be much appreciated, thank you
Expert:  bigduckontax replied 15 days ago.

Yes, bu tthat does not crystalise until I tell Just Answer that it has been successfully completed which I shall not be doing. No, it is the gain made not the disposal price which matters.

Customer: replied 15 days ago.
oh I see, so it's the value of the property between December 2019 and this month in essence...?
Customer: replied 15 days ago.
I don't need to declare the 44K to HMRC or anywhere else?
Expert:  bigduckontax replied 15 days ago.

Correct, no, only the gain needs to be declared and if it below the AEA it does not need to be declared at all.

Customer: replied 15 days ago.
super helpful, thank you!
Customer: replied 15 days ago.
I believe this will be all, I hope you have a lovely afternoon...hope it's sunny where you are! thank you
Expert:  bigduckontax replied 15 days ago.

It is sunny, but cold.

Pleased to have been of assistance.