GCT - Will this be allowed?

Hippo

John and Jane are married. They own some properties. They have lived in the family home (jointly owned) for years. They have now separated. They also own a flat (and have owned it for 15 years) but it's in Jane's sole name, during this time it wasn't their main home.

John has now moved into the flat and Jane has remained in the family home.

Am I right in saying that when the martial home is sold it's free of CGT as it was their PR and is now Jane's PR.

If the flat is sold in say 5 years time will the situation be that 75% of the capital gain will be taxable? This is because it wasn't a PR for first 15 years, but then for 5 years it was John's PR. Or are the waters muddied because whilst it was John's PR for 25% of the time it wasn't legally owned by him as it's in Jane's name

Nomunnofun1

On the marital home - in whose name is it now? If still in joint names you have to take into account that it is no longer the PR of John. If he has just moved out there is no CGT. Jane won’t have any liability to CGT. More details required. 

On the flat - no muddied waters at all- it’s very clear! John doesn’t own it. 

When it is sold Jane is liable for CGT with no private residence relief as she never lived in it!

It appears to me that John doesn’t currently own any property against which he can claim private residence relief. 

Hippo

Martial home is still in joint names. So if Jane sells in 10 years will any CGT be payable? For the portion that John hasn't lived there (yet he still owns)?

Regarding the flat then I assume Jane would need to either make John a part owner or simply gift him ownership to avoid any CGT that would be due when it's his PR. (Although Jane would have a CGT liability for when she owned it but only payable when/if flat is sold)

Nomunnofun1

Hippo said:

Martial home is still in joint names. So if Jane sells in 10 years will any CGT be payable? For the portion that John hasn't lived there (yet he still owns)?

Regarding the flat then I assume Jane would need to either make John a part owner or simply gift him ownership to avoid any CGT that would be due when it's his PR. (Although Jane would have a CGT liability for when she owned it but only payable when/if flat is sold)

You really need to take professional advice. 

On the marital home there is no CGT payable now. There will be if sold in 10 years time by John on his half share as it will not have been his main residence for ten years. 

There are so many things to consider with the flat. You would want to avoid an immediate charge to CGT by Jane on the transfer but timing is paramount and will depend on the divorce settlement. One for a solicitor. 

Hippo

Still married with no immediate plans for divorce.

Transfers of property atm are free of any CGT so they want to get it done pdq

Nomunnofun1

Hippo said:

Still married with no immediate plans for divorce.

Transfers of property atm are free of any CGT so they want to get it done pdq

You ought to read this:

https://www.litrg.org.uk/savings-property/capital-gains-tax/capital-gains-tax-separation-and-divorce

Bookworm225

you need to read the rules regarding PRR and "circumstances where the separation is permanent" (but not formalised in a legal divorce)

there are strict time limits on transferring under the no gain no loss rule in circumstances where the marriage is "over".

If Jane retains any element of ownership of the flat she will always have a CGT liability on it as she has no PRR claim during her ownership. Similarly John would acquire it at her original cost but with 15 years of CGT liability due to no PRR for the first 15 years.