Capital Gains Tax payable?

britflick

I am separating from my partner and we own a home together. I am
proposing to give him £80,000 now as a settlement, and remain in the house with my two children. When my youngest child reaches adulthood, I will give him a further 20% of the house value at that point. 

Would he be liable to pay capital gains tax now on the initial £80,000?

Nomunnofun1

Was the house his main residence throughout?

Markmywords

britflick said:

I am separating from my partner and we own a home together. I am
proposing to give him £80,000 now as a settlement, and remain in the house with my two children. When my youngest child reaches adulthood, I will give him a further 20% of the house value at that point. 

Would he be liable to pay capital gains tax now on the initial £80,000?

Sorry to hear that you are splitting up. If this is your main home then my understanding is that no cgt is payable. Hope that help you. 

Bookworm105

are you legally married and will the future 20% be subject to a mesher order as part of a proper divorce? 

britflick

We are not married no. I have a solicitor handling this but I am running out of funds to pay them, so trying to find answers to some of the queries myself. The remaining 20% would be a charge against the property to pay my ex partner at a certain time. 

Nomunnofun1

britflick said:

We are not married no. I have a solicitor handling this but I am running out of funds to pay them, so trying to find answers to some of the queries myself. The remaining 20% would be a charge against the property to pay my ex partner at a certain time. 

Was it his main residence throughout ownership?

Bookworm105

britflick said:

We are not married no. I have a solicitor handling this but I am running out of funds to pay them, so trying to find answers to some of the queries myself. The remaining 20% would be a charge against the property to pay 

if it has been his only (/main) home for the entire period between him becoming (co) owner and his giving up that (share of) ownership then he will not have any CGT liability on that 80K. It would be covered in full by Private Residence Relief

I note you use the word charge, that implies he will no longer be a legal (co)owner of the property after the 80k is paid. Will your solicitor be making sure the basis of the legal ownership is changed into your name only?
His financial benefit thenceforth is defined as a set % and he would be liable for CGT on that amount when it is paid. If it is genuinely a charge then it is an absolute sum of money and is not covered by PRR. He will be taxed on all of it.

Alternatively, if you really mean he retains 20% ownership of the property, he will still be entitled to some PRR against that payment for the period he lived there, so he will not have to pay CGT on that whole amount. If he will be reduced to 20% owner then please make sure you get a new deed of trust signed and witnessed to record that fact. (That of course assumes you currently legally own it as Tenants in Common - if you own as Joint Tenants then that opens a new can of worms that would need further sorting)

Markmywords

Bookworm105 said:

britflick said:

We are not married no. I have a solicitor handling this but I am running out of funds to pay them, so trying to find answers to some of the queries myself. The remaining 20% would be a charge against the property to pay 

if it has been his only (/main) home for the entire period between him becoming (co) owner and his giving up that (share of) ownership then he will not have any CGT liability on that 80K. It would be covered in full by Private Residence Relief

I note you use the word charge, that implies he will no longer be a legal (co)owner of the property after the 80k is paid. Will your solicitor be making sure the basis of the legal ownership is changed into your name only?
His financial benefit thenceforth is defined as a set % and he would be liable for CGT on that amount when it is paid. If it is genuinely a charge then it is an absolute sum of money and is not covered by PRR. He will be taxed on all of it.

Alternatively, if you really mean he retains 20% ownership of the property, he will still be entitled to some PRR against that payment for the period he lived there, so he will not have to pay CGT on that whole amount. If he will be reduced to 20% owner then please make sure you get a new deed of trust signed and witnessed to record that fact. (That of course assumes you currently legally own it as Tenants in Common - if you own as Joint Tenants then that opens a new can of worms that would need further sorting)

very good answer. how does the joint tenants cause problems?

Jeremy535897

With joint ownership the presumption is it is owned equally by the joint tenants. To specify legal percentages of ownership you would need a tenancy in common.