Unsure of purchase price of house for CGT purposes

Complicated_life

Hello all and thank you in advance for any help.

The problem we have is regarding a CGT return which will be due upon the imminent sale of my partner's house.  She divorced some years ago and bought out her ex. She then lived in the house for several years and then we have been living together in my house for a number of years.  Looking at the HMRC guidance we pretty much understand the calculation process and the PRR calculation.

However what is unclear to us is the purchase price of the property. The house and other assets and liabilities were divided up in a calculation for settlement in the divorce. At the time my partner took out a mortgage, since repaid to cover the purchase of the house in the settlement. She has looked through all the papers she has but can find nothing relating to the value of the house at the point it was transferred to her sole ownership. The land registry says it has no record of the sale price.

Has anyone any suggestions how to find the purchase price value to be included in the CGT calculation?  We have a good idea of the value of the house at the time but no documentation that would back that up. A backwards calculation of house price inflation in the specific area that the house is in confirms this estimation but would that be acceptable to HMRC?

Short of this a very difficult trawl by the original solicitor maybe in order and no doubt come at a price though given the length of time that has passed perhaps may be fruitless anyway. 

Thanks agin. 

Mark_d

If she took a mortgage of 100k to buy out her ex's share of the house, that would suggest the total value was 200k.  With the mortgage being secured against the property, I'd expect the  mortgage documentation to state the value of the house

lincroft1710

If HMRC are unhappy with the figure provided they will refer it to the District Valuer for their opinion of value and possible subsequent negotiation with your partner. So she should just submit what she believes the house was worth at date of acquisition

Complicated_life

Thanks all for your advice. A call to mortgage provider proved less than helpful. Evidence from Zoopla of the sale of the nextdoor but 1 house 6 months after for around the same recollected value does tend to confirm the value my partner had in mind. I guess being open with HMRC is best policy. We’re not talking Rockefeller numbers here and there seems an inherent unfairness in the loss 100% relief for someone in my partner’s position. Her son lived at the property rent free until he moved out last year and that has prompted the sale. 

Thanks once again for your help.

Bookworm225

Complicated_life said:

Hello all and thank you in advance for any help.

The problem we have is regarding a CGT return which will be due upon the imminent sale of my partner's house.  She divorced some years ago and bought out her ex. She then lived in the house for several years and then we have been living together in my house for a number of years.  Looking at the HMRC guidance we pretty much understand the calculation process and the PRR calculation.

However what is unclear to us is the purchase price of the property. The house and other assets and liabilities were divided up in a calculation for settlement in the divorce. At the time my partner took out a mortgage, since repaid to cover the purchase of the house in the settlement. She has looked through all the papers she has but can find nothing relating to the value of the house at the point it was transferred to her sole ownership. The land registry says it has no record of the sale price.

@Complicated_life are you sure you understand the CGT calculation in this case?

The rules regarding CGT in that circumstance changed on 6 April 2023, but your post implies the divorce took place before that date. Therefore the old rules would apply to the CGT calculation even though it is being calculated  "now"

I assume she was a co-owner of the property for the entire time it was the marital main home ?

Crucially she continued to occupy it as her main home after the divorce.

Because the divorce took place before 6 April 2023 that means the transfer of ex-spouse's share to her as part of the divorce settlement still falls into the "no gain no loss" rule applicable up to the date of (formal court) divorce, even though (I assume) they were not physically living together to the last second.

Therefore her CGT is based on her owning 100% of the property from the date it was originally purchased as she is deemed to have acquired his share at its original purchase cost when they first bought the property together.
The value at date of divorce is irrelevant.

As she continued to live in it as her main home post divorce she will therefore get 100% CGT relief on the portion of the time period to date she actually moved into your property.

Suppose it was originally purchased in 2000, she divorced in 2019, and moved in with you in 2023.
Original price £100k and sold for 500K in 2025 

Gross gain 500-100 = 400K
owned 25 years 
PRR period (2000-2023) = 23 years / 25 years = 92%
CGT liable portion 100% - 92% = 8%

Net taxable gain: 400k x 8% = 32,000 - CGT allowance (3,000) = £29,000

value at date of divorce irrelevant since the divorce means she acquires 100% ownership at the no gain no loss rule's cost back in year 2000.


(the rule change from 5 April 23 is that the no gain no loss transfer of assets between ex spouses is only available for up to 3 years after the end of the tax year in which they physically separated, not timed from when they legally divorced)