Capital Gains Tax on property with ex partner

Geneygene

My ex (not married) lives in and pays the mortgage on our joint property. I moved out 6 years ago and have since married. When she sells the house and I get my 50%, is there a way I can avoid CGT? I have read if I put it into an ISA or pension I wouldn’t pay CGT, but I’ve also seen I could use it for another property. Could I for example, use the whole amount to contribute to my wife’s mortgage and be added to her deeds? 

My 50% equity is approx £160k so wouldn’t fit into an ISA. 
thanks for any advice. 

Mark_d

You could reduce your CGT liability to account for the period you lived there but I don't think there are legal ways of avoid it

DullGreyGuy

Was it an interest only mortgage? Trying to work out how you get 50% of a property you haven't contributed to for at least 6 years especially as you weren't married

Geneygene

DullGreyGuy - 50% of the equity (no it’s a repayment). As it’s owned jointly is there a reason I wouldn’t be entitled to 50%? To my knowledge when it’s owned jointly, regardless of who lives there and pays the mortgage, I still own 50% of it. It was supposed to sell when we split up but at the eleventh hour she decided she wanted to stay put. 

BarelySentientAI

Geneygene said:

As it’s owned jointly is there a reason I wouldn’t be entitled to 50%? To my knowledge when it’s owned jointly, regardless of who lives there and pays the mortgage, I still own 50% of it.

Yes - the six years of equity that your ex contributed and you didn't.  Plus six years of house price growth on a property that you weren't contributing anything towards.

Those are two straightforward reasons why you might not be entitled to 50%.

Also, you say "owned jointly".  How?  JT or TiC?

Geneygene

Barely - I’m 99% certain it’s JT but would need to check. (I’m seeing a solicitor next week in any event) because I just need to get my knowledge right before I make any decisions. I pay CSA every month (not sure that counts for anything, probably not) but as she has also moved a new bloke in, my solicitor said I would now be in a position to force the sale, which I couldn’t do previously due to the children. Everything I seem to have read, and people I’ve spoken to, and a previous solicitor have told me I am entitled to my 50% regardless of who is paying. 

Bookworm105

Presumably you do not have any form of documented financial settlement over the split so there are 2 issues in play:
a) your legal ownership is either 50% because you are joint tenants or whatever % you have because your tenants in common status names an actual %
or
b) your beneficial ownership is whatever money you actually get when you sell it and is thus a % split you have agreed on (on paper of course!). Although you have not said it in clear words, there seems to be a suggestion you stopped paying the mortgage after moving out? If so the beneficial ownership should reflect the fact she has more of the equity than you have.
You may or may not accept that fact and amicably agree a % with her. If not, she may, or may not, contest that % with you through her solicitor and a court. If the fact is that you have not paid for 50% of the equity then, to be fair, the beneficial ownership should not be 50/50.

CGT is based on the beneficial ownership, not the legal one.... they can be different values!

your thoughts on avoiding CGT are simply wrong and not worth explaining further 

you are entitled to one exempt main residence. When married, it is de facto the property you both live in. 
In your case therefore it ceased to be your main residence when you moved out 6 years ago and you started living somewhere else. You have not returned to the ex's property to resume living there, so are not entitled to claim any exempt "absence" periods.
As it was once your main home you are entitled to a further 9 months exemption meaning your Private Residence Relief will be date of purchase to date moved out + 9 months = PRR period (in months)
deduct that figure from your total ownership period (in months) to give the non exempt period (in months) then use that in the formula: non exempt period / ownership period = CGT liable %

Your CGT then involves 3 steps:
1. calculate gross gain:  beneficial % owned x (selling price - purchase price - buying / selling costs -if you paid any) 
2.  gross gain x CGT liable % = gross taxable gain 
3. gross taxable gain - CGT allowance (currently £3,000) = net taxable gain 

You will then pay CGT on that net taxable gain at the rate of 18% and/or 24% (at current rates) and must declare and pay that tax within 60 days of the sale completion date 

CGT rates almost certain to significantly increase at forthcoming budget

Geneygene

bookworm105 that is extremely helpful and I am most grateful for the advice. Thank you for explaining.