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Where Taxpayers and Advisers Meet

CGT help!!!

leeduffy2004
Posts:1
Joined:Mon Mar 29, 2021 6:17 pm
CGT help!!!

Postby leeduffy2004 » Mon Mar 29, 2021 6:20 pm

Can anyone provide any basic CGT information?

I have a friend who is going through a seperation and there are potentially some CGT issues that may need ironing out.

First point is:
Marital home bought in 2016 for £330k and it is in a sole name (Mr). Valued today at circa £370k. The owner (Mr) of the property hasn’t lived there since Dec 2019 and therefore in my opinion would pay potentially CGT as there is a gain. Marital spouse who lives in the property with children would have no CGT to pay as this is currently her main residence.

Second point in this scenario:
There is a rental property that was purchased in (Mrs) sole name in 2004 prior to being married that was mortgage free. In 2009 it was moved into joint names with spouse and mortgage taken out.

Original purchase price in 2004 was circa £50k
Value at time of moving into joint names was £140k in 2009.
Current value today is £125k.

My understanding is for CGT is that the spouse would take the value at 2009 as his starting point, which is then halved and not use the original purchase for CGT in 2004. Therefore meaning that there is no gain as the value has gone down.

Am I right?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT help!!!

Postby maths » Tue Mar 30, 2021 10:37 pm

First point is:
Marital home bought in 2016 for £330k and it is in a sole name (Mr). Valued today at circa £370k. The owner (Mr) of the property hasn’t lived there since Dec 2019 and therefore in my opinion would pay potentially CGT as there is a gain. Marital spouse who lives in the property with children would have no CGT to pay as this is currently her main residence.


It's unclear who owns the beneficial interest in the property?
If owned 50/50 then on sale Mrs would have no CGT liability but Mr in principle would.
If Mrs has no beneficial interest she has nothing to sell.
Second point in this scenario:
There is a rental property that was purchased in (Mrs) sole name in 2004 prior to being married that was mortgage free. In 2009 it was moved into joint names with spouse and mortgage taken out.

Original purchase price in 2004 was circa £50k
Value at time of moving into joint names was £140k in 2009.
Current value today is £125k.

My understanding is for CGT is that the spouse would take the value at 2009 as his starting point, which is then halved and not use the original purchase for CGT in 2004. Therefore meaning that there is no gain as the value has gone down.
Agreed.


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