Capital Gain TAX

Capital Gain TAX

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Case: Husband and wife assets (who happened to be joint owners) , transferred on court consent order during divorce settlement

 Mr and Mrs Aged over 60s, entered into divorce settlement.
List of properties jointly owned by both Mr and Mrs (50:50 share). Legal title of all the assets jointly own by both.
Via court consent order on 31/10/2008 – draw a mechanism to split legal title as
X = Total Value of list of assets
Y = Bank Loan / Mortgages
Z = Net Freehold Value
Z = (X –Y)
 50% of Z to Mr AND 50% of Z to Mrs (Original Share of Mr and Mrs)
Per court consent say Mr will be responsible for bank loan and Mrs will have value equal to £Z x 50% value of property /assets free of loan.
In order to comply with court consent order change of legal title as follows;
Before implementation of court consent order:
1.      Assets / properties Jointly own by Mr and Mrs.
2.      Bank loan / Mortgage jointly responsibility
After implementation of court consent order:
1.      Assets / properties own by Mrs valued £Z x 50% free of Bank loan / Mortgage. (completely freehold)
2.      Bank loan / Mortgage solely responsibility of Mr (re scheduled Bank Loan / Mortgage)
3.      Assets / properties own by Mrs valued £Z x 50% inclusive of Bank loan / Mortgage.
 
 Question
Is there any Charge Gain for Capital Gain Tax.
My Argument
As a matter of fact this transferred happened between husband and wife but only legal title transfer to Mr and Mrs (which they already own equal share of the entire freehold). So in this case transfer took place, in order to find practical way forward and comply with court consent order which Mr and Mrs agreed before court. However to organised legally and split share of the freehold assets which they original own equally and no gain to any party as legal transfer to each other implement legal split.

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By TaxationPete
11th Jan 2011 09:55

Court Order

If it was done properly then there will be no CGT Liability also if the transfers of legal title were done in the same FY as the divorce then Inter spousal transfer rules apply even without a court order, on a no gain, no loss basis. The divorce lawyer should have addressed these issues. Also read this :
http://www.hmrc.gov.uk/manuals/CGmanual/cg73000.htm as it may address some of the ownership transfers of let properties. Regards Peter 

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