CGT on divorce

[mikep]

I understand that transfers between husband and wife in the year of separation are on a no gain or loss basis. However, I would like to be clear on the position where the transfer happens after the year of separation as the result of a divorce agreement.

My wife and I jointly own a house plot that has increased substantially in value. Under the divorce agreement I am to keep the plot, will I take over her share of the base cost or will the settlement agreement value or open market value be applied. If the base cost is not used will my wife have a CGT tax liability, as her gain will exceed her annual exemption?

[Anne-Marie]

It will be the Open Market Value as you are connected persons until decree absolute. Therefore your ex-wife will have a CGT liability.