help.....transfer of equity???

nikkita_2

my ex-partner and i have a mortgage in joint names,both names are on the deeds of the house.basically i would like to have the house in my sole name.i did some research and followed the guidelines.mortgage lender agrees that i can manage repayments on my own,ex has agreed to sign house over and doesnt want any money/share of it..all he wants is that he is no longer responsible for mortgage once his name is removed.i did my bit and he went 2 his solicitor today who refused to let him sign the house over???? solicitor says my ex will have 2 pay capital gains tax.is this true?how can u be taxed on sumthin u havent gained from?? this is the only property we own.can anyone help me with this? iv contacted my solicitor again and he says that my ex does not have 2 pay any money.any suggestions wud be appreciated,thanx

CLAPTON

I assume what you are saying is this

a. you bought the house jointly
b. your OH moved out
c. you now live there alone.

Now in principle there may be a CGT liability from the time he moved out to the time of transfer to you.
The fact he hasn't actually gained anything is irrelevant .. the fact of the disposal is what counts for the HMRC.

so when did he move out?

In practice its extemely unlikely that he will be liable to have to pay anything because
a. he is exempt for the period he lived there
b. he is exempt for the last three years
c. he has a CGT allowance of 9,200



so unless he moved out over three years ago and the house has gained a lot in value there should be nothing to pay.

nikkita_2

hi clapton,firstly thanx for the reply.basically me and my ex bought a house together approx 2 and a half years ago.we have a child together and i have kids from a previous marriage so my kids and i moved straight into the house wen we bought it.my OH and i decided that for personal reasons involving the kids he wudnt move in straight away.to cut a long story short,he moved in briefly in august last year but things didnt work out and he left.since then i have been paying the mortgage on my own.because we have a daughter together and also coz i pay the mortgage (maybe coz he feels guilty too) my OH is happy to sign the house to me n kids and doesnt want any money.the house is worth approx 70k more than it was when we bought it.hope this extra info helps.thanx

silvercar

If the revenue won't accept that he has lived there as his principal private residence, there could be a CGT liability.

Based on 50:50 ownership (the revenue presumption unless you can show a different split) Your ex's gain would be 35k, less his CGT allowance of 9,200 = 25,800. This would be charged at his marginal rate. At 40% this would be a bill of 10,320.

In the pre-budget, the chancellor announced the intention of reducing CGT to 18%. if this does become law, and he is happy to wait until April 2008, the tax would be only 4,644.