Selling an investment property that has become a primary residence

avmad

Hello all,

My sister is getting divorced.  She lives in the marital home.  The (almost) ex-husband now lives in a house that was previously an investment property for him and my sister.

Note:  The investment is actually owned by a group of people that own different percentages of it.  For the sake of this post, lets say that my sister and her husband each own 30 percent, then one other person owns 20 percent and two further people own 10 percent each.

The investment property was purchased in April 2010.  There is no mortgage.

Since my sister and the husband split up in November 2017, the husband has been living at the investment property.

Can anyone tell me what the position might be with regards to capital gains tax if the property was sold.  I believe that a second home or investment property would normally attract capital gains tax when sold but the property is now the primary residence of the husband.

Thanks!

J

Jeremy535897

Only the husband's share of the ex investment property can qualify for main residence relief if the property is sold, and only for the period since they formally separated that he occupied it as his main residence.

avmad

Thank you Jeremy535897.

I guess for the purposes of the divorce, my sister will need to get an accountant to document the calculation as she is being asked this to ensure that the actual value of her share is known if the property were to be sold.

J

Jeremy535897

Her calculation should be straightforward: 30% of the sale price, less 30% of the costs of sale, less 30% of any allowable improvements, less 30% of the cost price and acquisition costs, less any annual exemption/losses, at 18% or 28%, depending on her taxable income.