Capital Gains Calculation

1965Granges

Hi
A quick question (hopefully). I bought my house with my ex-husband in 1998. We've since divorced and a new mortgage taken out on the same property with my now husband in 2007. Which date should we use for the capital gains tax calculation? Or do we use the earlier date for me and the later date for my husband?

[Deleted User]

1965Granges said:

Hi
A quick question (hopefully). I bought my house with my ex-husband in 1998. We've since divorced and a new mortgage taken out on the same property with my now husband in 2007. Which date should we use for the capital gains tax calculation? Or do we use the earlier date for me and the later date for my husband?

Bit confused here! Has it always been your main residence? Has it been your now husband’s main residence since, presumably, it was put into joint names with the new mortgage? 

If so - where do you foresee any chargeable gain?

Mortgages are irrelevant!

Bookworm105

we will take as read you have never made a written nomination in respect of the property, so your liability to CGT will be based on "a matter of facts"

CGT only applies to a property that was NOT YOUR MAIN RESIDENCE

from 1998 you lived there with your then husband. At that time it appears to be a matter of fact that it was your main residence (I assume you did not own another property at the same time as that one, if you did your question just got complex)

when the marriage failed we assume your husband moved out and you continued to live there - please confirm: yes or no. (If you were the one who moved out your question just got complex)

you have since remarried (utterly irrelevant re your own tax position)) and continue to live in the property with your new husband who is now (we assume) a co-owner  (utterly irrelevant re your own tax position) 
.  
(with stated assumptions) IN SUMMARY 
you have owned the property since 1998 
It has been your main residence since that date 
You have ZERO CGT liability on that basis 


mortgages are utterly irrelevant whether married or not

1965Granges

Thank you both. I omitted the most important part.....in 2021 my husband and I moved to France and my understanding is we have to declare the sale to both the uk and French tax authorities. Our daughter has been living in the property since we moved under a consent to lease agreement with our mortgage provider. 

Jeremy535897

It would appear that the facts are as follows:
1. House bought 1998, joint names with first husband. Main residence.
2. Share owned by first husband transferred on divorce. If this happened before the end of the tax year in which you were permanently separated, your base cost becomes 100% original cost. If the transfer took place later, your base cost is 50% original cost plus value of ex-husband's 50% share at date of transfer.
3. In 2007 your second husband acquired 505 of the property. His base cost will be half your base cost, calculated as above.
4. You and your second husband let the property to your daughter in 2021 and ceased to be UK resident and became French resident.
5. You  and your second husband sold the property in 2024 without ever moving back in.

The gain is the sale proceeds, less selling costs, less the base cost determined as in 2 above, less acquisition costs  (half only if you acquired the property from your first husband at market value), less improvements (deductibility will depend on who incurred them and when). From this gross gain, calculate the number of months it was your main residence and add 9. Say that is 285 months. Say total ownership is 312 months. Only 25/312 of the gain is taxable, shared between you and your second husband (presumably equally) and you can set any available losses and annual exemptions against it. It is likely there will be no material gain.

You may have French tax to pay, but the French should give credit for any UK tax payable, up to the French tax due (not the social charge). There is some commentary here:
https://www.kentingtons.com/taxation/capital-gains-tax-in-france/
Main residences are normally exempt from capital gains tax in France, but whether that extends to ex-main residences overseas is something you need to discuss with French tax advisers.

See: https://www.gov.uk/government/publications/non-resident-capital-gains-for-land-and-property-in-the-uk-self-assessment-helpsheet-hs307/hs307-non-resident-capital-gains-on-direct-and-indirect-disposals-of-interest-in-uk-land-and-property-2024

1965Granges

Many thanks for this, it's really helpful. We have a notaire taking care of the French side, we were just stuck on the English declaration.