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Where Taxpayers and Advisers Meet

Liable for CGT or not?

HumbleBumble
Posts:3
Joined:Sun Mar 17, 2024 3:16 pm
Liable for CGT or not?

Postby HumbleBumble » Sun Mar 17, 2024 3:21 pm

Hello,

I'm unsure if this scenario warrants CGT or not. This is regarding my partner's situation.
2012- left his (then) wife, continued to pay mortgage on family home - in full, she never paid a penny in.
Rented a place for himself until 2016 when he moved in with me.
Divorced 2020- still paying the full mortgage
House sold 2022.
It's the only only property he has ever owned and he continued to pay the mortgage at all times until it sold.

Is he liable for CGT? I've been reading a load of stuff and it's still not clear, the grey part being the fact he wasn't living in it for several years. Can anyone advise?

Many thanks.

Jholm
Posts:377
Joined:Mon Mar 11, 2019 4:22 pm

Re: Liable for CGT or not?

Postby Jholm » Mon Mar 18, 2024 5:04 pm

Yes, CGT likely due. Not enough here to talk specific numbers.

Private residence relief relates entirely to periods of either actual or deemed occupation (the latter he won't be due as he didn't return to the property after leaving in 2020.

Mortgage payments are largely irrelevant for CGT purposes.

Black and white case here, time spent living there as main residence versus otherwise.

Jholm
Posts:377
Joined:Mon Mar 11, 2019 4:22 pm

Re: Liable for CGT or not?

Postby Jholm » Mon Mar 18, 2024 5:05 pm

*leaving in 2012, sorry

bd6759
Posts:4296
Joined:Sat Feb 01, 2014 3:26 pm

Re: Liable for CGT or not?

Postby bd6759 » Mon Mar 18, 2024 10:10 pm

Not living in the property isn’t a grey area. It’s black and white. No relief from CGT is due for periods when it is not where he lives. Being his only property doesn’t affect that.

HumbleBumble
Posts:3
Joined:Sun Mar 17, 2024 3:16 pm

Re: Liable for CGT or not?

Postby HumbleBumble » Tue Mar 19, 2024 1:52 am

Thanks for responses but I did read a clause about 'break up of relationship' being exempt. AsI said, read plenty, unclear. We're just unsure how to go forward. Solicitors spoke to HMRC, they seemed to think no, not liable, but unsure how much info they had. It's so confusing.

bd6759
Posts:4296
Joined:Sat Feb 01, 2014 3:26 pm

Re: Liable for CGT or not?

Postby bd6759 » Tue Mar 19, 2024 9:17 am

Why did he keep paying the mortgage?

If it were by an order of the court or some binding agreement, the answer might be different. That is perhaps what you are thinking about, so perhaps there are shades of grey.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65365

HumbleBumble
Posts:3
Joined:Sun Mar 17, 2024 3:16 pm

Re: Liable for CGT or not?

Postby HumbleBumble » Wed Mar 20, 2024 3:32 am

He paid the mortgage because his children were in the house and because he's an honourable man

AGoodman
Posts:1767
Joined:Fri May 16, 2014 3:47 pm

Re: Liable for CGT or not?

Postby AGoodman » Thu Mar 21, 2024 3:20 pm

Unfortunately he may have just missed out on a rule change as the rules were liberalised in 2023 (s.225B TCGA)

Before that there was limited relief under s.225B but only if the disposal was to the former spouse. It only covers sales to third parties from 2023.

Both versions of the rules would have required the sale to be pursuant to some kind of agreement or order on divorce.

bd6759
Posts:4296
Joined:Sat Feb 01, 2014 3:26 pm

Re: Liable for CGT or not?

Postby bd6759 » Thu Mar 21, 2024 9:56 pm

I’m sure if he looks hard enough he will find the agreement he had forgotten about ;)

And in that same place he’ll find the letter where he transfers his beneficial interest to he ex-wife a few months before it was sold. 8-)


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