The family home - CGT and divorce

sonny_c

Good afternoon, I hope someone can advise as I’m trying to determine how much CGT I’ll be exposed to.

Me and my wife have not lived together since March 2019. I moved out of the marital home and purchased a flat October 2019. We bought the marital home approximately 20 years ago for £32,000 and had a house extension for £48,000. There is no mortgage on the property and current market value is £150,000

We have started divorce proceedings and my wife plans to continue to live in marital home. My share £75,000

V2001

Are you selling your share to wife? If so is she buying you out in cash.
From 6 April 2020, the spouse who moves out of the family home will only have a nine-month window in which to sell their interest before CGT applies to the proceeds of the sale. CGT will be charged at 28% on the departing party's share in the matrimonial home, assuming the departing party is a higher rate taxpayer.

[Deleted User]

V2001 said:

Are you selling your share to wife? If so is she buying you out in cash.
From 6 April 2020, the spouse who moves out of the family home will only have a nine-month window in which to sell their interest before CGT applies to the proceeds of the sale. CGT will be charged at 28% on the departing party's share in the matrimonial home, assuming the departing party is a higher rate taxpayer.

IF all of the extension is an allowable cost for CGT (it should be) there is very little likelihood of any CGT becoming payable. Let’s assume that the property is sold in April and the total period of ownership is 20 years (240 months). It was the op’s PPR for approximately 216 of those months and we add the 9 months - 225/240 of the gain is exempt. 15/240 of 35000 is 2187, covered by allowance of 12300. Even if none of the extension was allowable, the op’s gain would be 59000. 15/240 is chargeable = 3687  - again covered by annual allowance of 12300.

I have assumed that the op left the house in March 2019.

sonny_c

V2001 said:

Are you selling your share to wife? If so is she buying you out in cash.
From 6 April 2020, the spouse who moves out of the family home will only have a nine-month window in which to sell their interest before CGT applies to the proceeds of the sale. CGT will be charged at 28% on the departing party's share in the matrimonial home, assuming the departing party is a higher rate taxpayer.

Yes I will be selling my share to wife who will take out a mortgage. The 9 month window has long gone.
Thanks

sonny_c

purdyoaten2 said:

IF all of the extension is an allowable cost for CGT (it should be) there is very little likelihood of any CGT becoming payable. Let’s assume that the property is sold in April and the total period of ownership is 20 years (240 months). It was the op’s PPR for approximately 216 of those months and we add the 9 months - 225/240 of the gain is exempt. 15/240 of 35000 is 2187, covered by allowance of 12300. Even if none of the extension was allowable, the op’s gain would be 59000. 15/240 is chargeable = 3687  - again covered by annual allowance of 12300.

I have assumed that the op left the house in March 2019.

Still a mine field if honest buts that's very interesting. Yes I left marital home March 2019
Thanks

[Deleted User]

sonny_c said:

purdyoaten2 said:

IF all of the extension is an allowable cost for CGT (it should be) there is very little likelihood of any CGT becoming payable. Let’s assume that the property is sold in April and the total period of ownership is 20 years (240 months). It was the op’s PPR for approximately 216 of those months and we add the 9 months - 225/240 of the gain is exempt. 15/240 of 35000 is 2187, covered by allowance of 12300. Even if none of the extension was allowable, the op’s gain would be 59000. 15/240 is chargeable = 3687  - again covered by annual allowance of 12300.

I have assumed that the op left the house in March 2019.

Still a mine field if honest buts that's very interesting. Yes I left marital home March 2019
Thanks

The ‘nine month window’ Is not what you believe it to be. If your only house was your main residence at any point, you can extend that period by nine months. As I showed previously, I do not see how you have any Capital Gains tax to pay.

sonny_c

purdyoaten2 said:

IF all of the extension is an allowable cost for CGT (it should be) there is very little likelihood of any CGT becoming payable. Let’s assume that the property is sold in April and the total period of ownership is 20 years (240 months). It was the op’s PPR for approximately 216 of those months and we add the 9 months - 225/240 of the gain is exempt. 15/240 of 35000 is 2187, covered by allowance of 12300. Even if none of the extension was allowable, the op’s gain would be 59000. 15/240 is chargeable = 3687  - again covered by annual allowance of 12300.

I have assumed that the op left the house in March 2019.

That is fantastic news... 
Sorry to be a pain but can you explain where these figures come from 35000 and 59000
Many thanks

[Deleted User]

sonny_c said:

purdyoaten2 said:

IF all of the extension is an allowable cost for CGT (it should be) there is very little likelihood of any CGT becoming payable. Let’s assume that the property is sold in April and the total period of ownership is 20 years (240 months). It was the op’s PPR for approximately 216 of those months and we add the 9 months - 225/240 of the gain is exempt. 15/240 of 35000 is 2187, covered by allowance of 12300. Even if none of the extension was allowable, the op’s gain would be 59000. 15/240 is chargeable = 3687  - again covered by annual allowance of 12300.

I have assumed that the op left the house in March 2019.

That is fantastic news... 
Sorry to be a pain but can you explain where these figures come from 35000 and 59000
Many thanks

Yep - 

1) If extension costs not allowable - Sale Price 75000 less cost 16000 = 59000 (all figures are your half share)

2) If extension costs fully allowable - Sale Price 75000 less cost 16000 less extension costs 24000 = 35000. (All figures are your half share)

sonny_c

purdyoaten2 said:

Yep - 

1) If extension costs not allowable - Sale Price 75000 less cost 16000 = 59000 (all figures are your half share)

2) If extension costs fully allowable - Sale Price 75000 less cost 16000 less extension costs 24000 = 35000. (All figures are your half share)

Please accept my deepest thanks - explaining in layman terms even I now understand the process.