Capital gains tax after separation

Jonahs98

Hi,

I am in a bit of a complicated situation re second property ownership with my former partner and whilst we are in the process of separating our assets I want to know where I stand re Capital gains tax.

Background:

My former partner and I currently own two properties:

1. Chester Property – our home, which we lived in together for around 10 years, where my former partner still lives.

1. Northampton Property – purchased in December 2022, where my mother currently lives.

When we bought the Northampton property, we paid the additional 3% stamp duty rate, as it was considered a second property. My mother couldn’t get a mortgage in her name due to age/employment, so we took out the mortgage in our names and have been covering all payments, though she lives there.

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Main Residence Declaration:

I was advised that to avoid potential capital gains tax issues as an unmarried couple, I submitted a declaration to HMRC stating that the Northampton property as my main residence. 

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Current Situation:

My former partner and I separated seven months ago, and next month we will be dividing the two properties. The plan is:

• She will retain the Chester property, removing my name from the mortgage and deeds, and giving me a lump sum from the equity.

• I will use this sum to reduce the mortgage on the Northampton property, which will be solely in my name.

So ultimately, we will each end up with one property in our individual names, rather than jointly owning two.

Are there any capital gains tax implications to us dividing the properties this way?

Any advice would be greatly appreciated!

saajan_12

Please stick to the one thread (I know you're asking about CGT not SDLT but the background is substantially the same).