CGT on sale of property after divorce

[Harrietmim]

Hi,

I'm trying to work out the CGT position if our formal marital home was sold. It was bought jointly with my ex-husband (and is still jointly owned according to the Land Registry and mortgage company) but our divorce agreement transfers all beneficial interest in it to me and gives him a 25% charge over the property. I've always lived in the house, so wouldn't be liable for CGT, but he hasn't lived in it for over 10 years.

It was bought for about 250k and is now worth about 550k. If he is liable for CGT how would his gain be calculated?

Any advice gratefully received, thanks

Harriet

[pawncob]

Is the charge for a specific amount or does he still retain 25% ownership? If the latter then he may have a chargeable gain.
His gain would be time apportioned over the period of ownership/occupation.

[Harrietmim]

Thanks pawncob, it just says he has a 25% charge over the property, no specific amount. My confusion is mainly on what the start and end figures would be in the calculation - would it be 50% of the purchase price (since it was bought jointly) and 25% of the sale price (to reflect his current charge)? In that case, there's virtually no gain, so presumably no CGT to pay?

[pawncob]

With a £300k gain, his share at 25% would be £75k, but............
This assumes that before (or on ) the decree nisi the proportion of ownership was varied such that you acquired his additional 25%. This transfer would have been at no gain/no loss as you were still H&W. This makes your purchase cost £250k x 75% and his 25%, so the result remains the same. His gain is £550/4 less £250/4 =£75k., but subject to PPR relief.

[maths]

The transfer of the beneficial interest within 18 months by ex-husband should not give rise to any CGT charge.

However, if the charge is effectively for 25% of the ultimate dale proceeds (i.e. not a fixed absolute amount) on receiving the sale proceeds he will have made a disposal of a so-called chose in action and a CGT charge will arise.

[Harrietmim]

Thank you maths and pawncob. The divorce order says that all the beneficial interest in the property is transferred to me, but the property is subject to a 25% charge. The amount my ex-husband will actually receive will be 25% of the net proceeds after repayment of the mortgage, which is 300k, so about 75k. So would he be taxed on 75k as a 'chose in action' and is there any PPR relief in that case?

[maths]

No PPR will apply to the gain on the chose in action.