CGT on property on divorce

CGT on property on divorce

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Hello,

I have a relative who is in the process of seperating.  The couple jointly own two investment properties. 1 purchased in 2003 for £150,000 and 1 purchased in 2009 for £200,000.  They are both worth approx £250k today.  They have agreed to take 1 property each, however the person taking the property purchased in 2003 wants to be compensated for the extra CGT they would pay as the base cost is lower.  This person also has a capital losses from share disposal during the marriage. Does anyone know the fairest way of doing this calculation? Should it include using the persons previous losses and the annual exemptions and should it be calculated on them both being basic rate taxpayers? (they are currently). I'm aware that the no gain/loss ceases in the tax year of seperation (2013/14) so am I correct that the transfer should be done before 5th April 2014. Thanks

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By johngroganjga
13th May 2013 10:02

If they were living together on 6 April 2013 but have separated since, yes they have until 5 April 2014 to take advantage of the inter-spouse CGT exemption.

If the parties are using solicitors you should take the instructions of those solicitors on what CGT calculations are required and on what basis they should be carried out.

However if the parties' are going it alone and are asking you to help them with the property issues, the CGT calculations to prepare are just of the contingent CGT liability arising on each property once it is in sole ownership, taking account of capital losses and unused basic rate bands as the case may be.

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By johngroganjga
13th May 2013 10:58

Even without the inter-spouse CGT exemption they should be able to roll over the gains on the mutual exchange of their half interests - see TCGA s248. 

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