CGT on selling a Buy to Let property after divorce

by Readers Question

9:23 AM, 7th February 2020
About 9 months ago

CGT on selling a Buy to Let property after divorce

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CGT on selling a Buy to Let property after divorce

Hi, I am after a bit of advice. I purchased a Buy to Let property in 1998 for £14550 on a mortgage in my name only. I married in 1999 and we then went on to buy a couple more BTLs.

We divorced in 2008 when I had to remortgage this particular flat along with another and family home to pay off my husband.

That flat at that time was valued at £110k and he was paid off half that equity.

I am now in a position of wanting to sell.

Am I still liable for the CGT of £110k – £14.55k (min allowance and expensive etc) or is the cost at the market value at the point of divorce/transfers of equity?

Many thanks

Rachel


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CPWade

10:51 AM, 8th February 2020
About 9 months ago

Hi Rachel
From your question it seems your ex husband was never on the title deeds of this property so there has never been any transfer between you and him even though its value was included in the divorce settlement. Unfortunately it seems your capital gain would be based on the sale price achieved, less original purchase cost, expenses and any reliefs available, PPR, Lettings relief, etc.

Also, have you considered other options, eg. do have a lower liability on other properties or do have any shares you are holding that could generate a loss if sold in the same tax year?

Mervin SX

14:39 PM, 8th February 2020
About 9 months ago

Rachel,
When the divorce settlement was calculated, the equity in your first BTL property would have been calculated using the value at that time, minue mortgage outstanding, minus costs you would have incurred if you sold at that time, minus CGT you would have incurred if you sold at that time. In other words, by paying your ex-husband, you have not given half of your equity. You have given half of what would have been left off your equity. If this has not happened in your case, then your legal team has not represented you well and it will be unlikely to go back and make a claim.
So, to answer your question - if you sell this property now, you will pay CGT on any gains made, based on sale price today and the purchase price in 1998.


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