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CGT - moving into previous home following divorce
Lennys_Shinpad
Posts: 231 Forumite
in Cutting tax
My wife and I have agreed to divorce. We are currently joint-mortgage holders on our family property. I am planning on transferring this house into her name and moving into a property I owned before I met her, which has been rented out for the last 12 years.
Does anyone know how long I need to live in my new property (after the family home has been transferred to my wife) for me to declare it as my primary residence and therefore be expect from CGT?
Does anyone know how long I need to live in my new property (after the family home has been transferred to my wife) for me to declare it as my primary residence and therefore be expect from CGT?
Save £6k in 2015 - Jan £500
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Comments
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Why would you be subject to CGT if you are not selling it?0
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Sorry, I wasn't clear. I will probably look to sell it fairly soonish as it is a small house and not as close to my children as I would like to be. I could sell it without moving back but would definitely need to pay CGT if I did that.Save £6k in 2015 - Jan £5000
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When you sell it CGT cannot be avoided as you have not lived in it as your main residence for a substantial period of time. If it does become your main residence the calculation will be:
Sale price less cost price less costs of purchase and sale less improvement costs. Let’s say £60000.Private residence relief is calculated by reference to the time the property was your main residence as a proportion of the time that you owned it. For example:
If you owned it for 240 months and it was main residence for 51 months 60/240 of the gain (9 months is added if it was ever your main residence) would be exempt leaving 45000 gain chargeable before annual exemption of 12300.Obviously the longer you live in it, the higher the private residence relief proportion- but it will never be exempt.0 -
OK I see, so whatever happens, I will need to pay CGT for the period of time I spent with it rented out? That makes sense to me.Save £6k in 2015 - Jan £5000
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Actually the time when it was not your main residence but you seem to understand the concept.Lennys_Shinpad said:OK I see, so whatever happens, I will need to pay CGT for the period of time I spent with it rented out? That makes sense to me.1
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