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Where Taxpayers and Advisers Meet

CGT query - divorce transfer

SBUK
Posts: 1
Joined: Mon Apr 02, 2018 2:08 pm

CGT query - divorce transfer

Postby SBUK » Mon Apr 02, 2018 2:15 pm

I have transferred my share of a jointly held property to my ex husband post the year of separation.
The property was acquired for £183,000 and had increased to est. £350,000 on transfer. It was owned for 136 months. We lived there as our only residence for 43 months and it was rented out for the rest of the time.

I am completely confused about how to calculate the gain. I assumed I would calculate the total gain minus reliefs and split 50/50. I checked this with the tax office who stated it was correct. My ex husband is disputing this methodology. Can someone confirm the correct calculation here?

maths
Posts: 7594
Joined: Wed Aug 06, 2008 3:25 pm

Re: CGT query - divorce transfer

Postby maths » Wed Apr 04, 2018 3:54 pm

I assume that the property was your sole residence initially and then it was let out thereafter and you transferred your (50%?) to him at a time when the property was let out and in a tax year after the tax year of separation.

The assumption is that your 50% was transferred at market value i.e. 50% of £350k i.e. £175k (possibly with a 10% discount).

Assume £175k less 92k (50% of cost).

Gain equals 83k.

Residence relief [43 + 18}/136 x 83k = 37,228
Lettings relief 37,228

Gain 83k - 37,228 - 37,228 = 8,544.

Less annual exemption say 11,000

Taxable gain NIL.

I would be inclined to ask your ex for his computation as to what he feels is your CGT liability before disclosing your view.

wamstax
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Re: CGT query - divorce transfer

Postby wamstax » Wed Apr 04, 2018 4:56 pm

It is really irrelevant what your husband thinks as unless he has sold the property he will have no current CGT liability and of course your gain is on your 50% only. His Cgt calculation will be calculated according to his disposal of the Property whoever that happens.
regards and hope this helps
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wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: CGT query - divorce transfer

Postby wamstax » Wed Apr 04, 2018 5:01 pm

The only question that could affect him is the market value of th 50% transferred to him as it would be relevant for his future disposal calculations.
As maths says the market value of your 50% could be depressed as your husband being in occupation or more correctly interested could affect the saleability of the property in a negative way.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

maths
Posts: 7594
Joined: Wed Aug 06, 2008 3:25 pm

Re: CGT query - divorce transfer

Postby maths » Wed Apr 04, 2018 5:30 pm

Maybe under divorce settlement husband has to pay or contribute to ex wife’s CGT liability??

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
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Re: CGT query - divorce transfer

Postby wamstax » Wed Apr 04, 2018 6:07 pm

Maths - agreed with your comments but is he sensible in arguing for another method of calculation and he presumably knows better than HMRC and people like us who have some experience in dealing with main residence etc relief. Nae wonder there was a divorce
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website


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