Capital gains on buy out from ex girlfriend

[SteLacca]

This could all go pear shaped trying to informally slip things through. I'd suggest that you ensure that a transfer of title to your ex takes place when the money arrives, if that is the intention. However, be sure of valuations. If the actual gain based on market value is greater than the £20k, HMRC may still invoke related party rules and seek to calculate CGT based on MV.

As has already been mentioned, there will be relief available for the time that it was your principal private residence + 18 months, but there is still likely to be a chargeable gain which, if > than your exemption of £11,100 will give rise to a CGT payment.

If you aren't clear, I suggest that you seek professional advice where you can provide full details and get proper advise.

[SteLacca]

This could all go pear shaped trying to informally slip things through. I'd suggest that you ensure that a transfer of title to your ex takes place when the money arrives, if that is the intention. However, be sure of valuations. If the actual gain based on market value is greater than the £20k, HMRC may still invoke related party rules and seek to calculate CGT based on MV.

As has already been mentioned, there will be relief available for the time that it was your principal private residence + 18 months, but there is still likely to be a chargeable gain which, if > than your exemption of £11,100 will give rise to a CGT payment.

If you aren't clear, I suggest that you seek professional advice where you can provide full details and get proper advise.

[pawncob]

I think this is too complicated to deal with here. You have to decide if you wish to dispose of your half share, otherwise trouble will eventually arrive at your doorstep.
If you sell now ( to her or her brother) you can't do so at an undervalue. What does the £20k represent? It's not the full value of half the house is it?
If you just take the money on offer, you could end up with a large CGT bill when the house is sold in the future. Take professional advice.

[Brian Clarke]

I bought a house with my ex girlfriend , about 15 years ago and this was a joint mortgage .

Unfortunately we split up about 8/9 years ago , where upon splitting up I moved out of the house and began renting her brothers house .

Renting was the only option at the time ,because she didn't have the funds to buy me out and I didn't have the funds to put a deposit down .

Recently , her brother has come into some money from a split with his ex and he is going to give me £20k , on her behalf ,as his sisters buy out to me . She will give him the money back ,when their mums house sells later this year and from her half she will give him It back .

I still have my name on the mortgage which I can't get off , I'm not paying for the mortgage and never have since we split up and get house hasn't been sold .

My Question is this .

Will I have to pay capital gains tax on the £20 from her brother transferring the money to me on her behalf ,or ,will I be ok .

I've read a few bits about a 18 month clause where I have been out of this house and would have to pay , but also seen items regarding my main residency.

What a messy situation! This is the position, as far as I can see.

1. At this moment, you still own 50% of the house.
2. You are proposing to give up your share, in return for £20K.
3. When you give up your share in the house, that is a disposal of a chargeable asset, and therefore CGT is payable (by you).
4. The CGT is based on the market value of the house at the time of disposal of your share, so you need to know what that is, and you also need to estimate as best you can - perhaps with professional help - what the market value was at the time you moved out, because that figure will also be needed for the computation. The £20K is not really relevant for tax purposes.
5. You need to get your name off the mortgage, and it sounds like this can only be done by re-financing. You will need to do this in conjunction with a decent solicitor.
6. You would pay CGT on half the increase in the value after moving out, but you are right that the last 18 months of the gain would be tax free; this is because the house was at one time where you lived.

This is really a situation where you need professional help, perhaps starting with the solicitor.