Which property would incur CGT if a couple live in 2 different properties?

J_forest

Hello,

My husband and I bought our 2nd property and used it as our main home in 2016. The previous main home was rented out. 

4 years ago we separated and he moved back to the 1st property and I stayed in the 2nd property with our child.  He helps to pay half of the mortgage of my home (the 2nd property) as we paid off the mortgage his.

Now my husband plans to sell the 1st property and move close to me, literally next door. But we will still live separately.

Would the 1st property incur CGT or only when I sell the 2nd property?  Both properties have our names.

If I give up my name on the 1st property, will it help with tax? 

Many thanks.

Bookworm105

you each own 2 properties and, most importantly I assume the marriage has broken down but there is no legal divorce or other written financial settlement in place, (especially if your child is still a minor covered by a "mesher order")

If the above is the scenario then you live in one and he lives in the other and despite your continued use of the word "husband", you appear to have in fact separated in circumstances which are likely to be permanent and that is shown by the fact you no longer live "together" 

Therefore, you are no longer entitled to be treated as a married couple, so yes CGT will apply to your share of his house,  and on his share of your house, from the date of the separation ("4 years ago")

If you come back and say he is not listed as an owner of your house, that is not clear cut for CGT since that tax applies to the beneficial ownership, not legal ownership. The fact he has been paying the mortgage strongly implies he has a beneficial financial interest in your property (he will get money from it when it is sold) in the same way as, it appears, you will get money from his when that is sold.

read this
HS281 Capital Gains Tax civil partners and spouses (2024) - GOV.UK (www.gov.uk)
section 3 bullet 3 covers a separated couple


BTW since you are not living together as husband and wife you lose the exemption that applies to transfers / gifts between spouses.
So "giving up your name" is treated as a disposal for CGT purposes even if no money changes hands. The donor would have to pay CGT on the gain to date of gift otherwise it would be easy to evade tax by transferring assets along a family line for example.