Capital Gains Tax liability after Split

by Readers Question

11:24 AM, 13th December 2014
About 4 years ago

Capital Gains Tax liability after Split

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Capital Gains Tax liability after Split

I know I need to get professional advise on this but just wondering if anyone has any ideas in the meantime. Capital Gains Tax liability after Split

Myself and my ‘now’ ex purchased a house 14 years ago for £280K – we also added to the mortgage an additional £80K as the house required replumbing/rewiring/new windows etc.

We split up 3 years ago and after spending about 9 month on the sofa, I was able to purchase (with my business partner) a flat for me to live in. So basically the flat has been my main residence for just over 2 years.

During this 2 year period I have continued to pay the mortgage and bill on the house.

We hope to sell for around £750K, so after paying off the mortgage of £255K. We will net around £495K. Myself and my ex were never married and even though I have no obligation to offer her more than 50%, I have agreed a 70/30 split in her favour.

So my question is, what is my capital gains tax liability, based on the fact that I will receive around £148K? Does the fact that the house was my man residence for 12 of the 14 years make a difference? Does the fact that I haven’t been receiving any rent/income on the house make a difference?

I guess its pretty gauling that I’m doing the honourable thing by giving a big chunk of equity that I don’t have too, but I then get hit for tax on my smaller chunk.

Thanks in advance for any feedback,

Mark Saunders



Comments

Mark Alexander

11:24 AM, 13th December 2014
About 4 years ago

Hi Mark

Given that the property was your principal private residence for such a long time, and that you also have your annual CGT exemption allowance, I suspect that you will have very little tax to pay, if any at all.

This is my recommended tax adviser >>> http://www.property118.com/member/?id=452
.

Shakeel Ahmad

21:32 PM, 15th December 2014
About 4 years ago

I agree with Mark. Please be aware how you personally decide to split your gain between you & your ex is has no bearing on the CGT. One way of establishing this by the tax man is in what proportion were you both declaring your rental income for income tax purposes.

In addition you may not have been married. However if the House was in joint names than she will be also entitled to her PPR.

Besides the above you both will also be exempt for the last eighteen months of the gain during your ownership plus Private residential letting of max £40K.

Michael Barnes

9:25 AM, 16th December 2014
About 4 years ago

Reply to the comment left by "shakeel ahmad" at "15/12/2014 - 21:32":

The original post does not say the property was ever let. Therefore I believe that in this case your advice does not apply.

Mark Saunders

9:44 AM, 16th December 2014
About 4 years ago

That's Correct the property was never let, I have not received any income since moving out. Only paid money out, ie mortgage and bills etc.

M

Shakeel Ahmad

11:07 AM, 16th December 2014
About 4 years ago

My advise was a broad one. As you would appreciate each circumstance is different.


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