CGT on divorce

DBPG

Hi. My wife is divorcing me. The family home is in her name because I could not get a mortgage due to my age. I have paid all the mortgage repayments since we got married 20 years ago. As part of the settlement my wife takes the family home and sells it and I get nothing from the sale. There are no children involved. As I paid for the house and she now makes a profit from the sale, is she liable for income tax or capital gains tax?

Ozzuk

Her tax position isn't really any of your business, but I'd certainly be getting proper legal advice as the split doesn't sound right. I assume you can prove you've been paying the mortgage so the split should be at least 50/50 and go from there. Don't forget pensions as well.

Malthusian

Ozzuk wrote: »

Her tax position isn't really any of your business, but I'd certainly be getting proper legal advice as the split doesn't sound right.

Not enough information to suspect that. I assume the OP has pensions or investments that he is keeping to balance it out.

Her tax position is potentially the OP's business because if - for the sake of argument - he gives her an asset which she can't use without selling and paying tax on, then it is the net amount after tax that matters for the purpose of deciding a fair split, not its theoretical value.

But it doesn't sound as if that applies here. If she has lived in the home ever since you bought it, there will be no capital gains tax due to principal private residence relief.

davidwood123

Doesn't matter if it's not in your name.

You still have rights after being married for so long.

Sambella

It is family money regardless. You are entitled to a share.

why on earth did you agree to this or not fight your corner?

Malthusian

As part of the settlement my wife takes the family home - I don't know why people are jumping to the conclusion that the settlement is unfair when we haven't been given the full picture, unless they just want to boost their postcount.

rpc

Spousal tranfers are generally exempt, and most divorce settlements have similar exemptions.

The name on the mortgage is somewhat irrelevant as long as your marriage was not a short one - the house is a marital asset and the husband and wife paid for it with marital money. The name on the bank account is also somewhat irrelevant after 20 years.

So the money paying the mortgage belonged to both of you, the house belonged to both of you, it is highly unlikely any tax would be due.

edit: not quite that simple, it seems.

If you transfer the asset within a tax year that you both lived there, no problem. Otherwise:

gov.uk wrote:

If a transfer occurs between you and your spouse or civil partner after the end of the tax year in which you stop living together, there are rules to decide the date of disposal and the amount of consideration on disposal. These rules depend on your particular circumstances and the information you will need is the date of :

any decree absolute or dissolution of the civil partnership
the court order if the asset was transferred by such an order
any other contract under which the asset was transferred
As the rules are complicated, they’re not included in this helpsheet. Once you hold the necessary information, ask us or your tax adviser for help.

See https://www.gov.uk/government/publications/husband-and-wife-civil-partners-divorce-dissolution-and-separation-hs281-self-assessment-helpsheet/hs281-spouses-civil-partners-divorce-dissolution-and-separation-2016#capital-gains-tax-liability