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Any CGT on splitting properties following divorce?

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I have a case where husband and wife clients have had 8 properties, jointly owned, all mortgaged and rented out.  They are now divorcing, the decree nisi was 30 Mar 2017, though the decree absolute has not been obtained. They have agreed to share the properties, including the matrimonial home, between them. It takes time to change legal ownership of the properties. The CGT situation is complex, but I wonder if anyone has the definitive answers to questions such as the following:

how long or up to when does the spouses no gain no loss rule apply?

in these situations, is the date of disposal of a property for tax same as the date of legal transfer or date of one of the decrees?

will it be beneficial to them to complete the transfers of the properties after decree absolute?

if the transferor spouse is making a gain, does this mean the transferee (receiving the others share) will be making a loss? 

Are there any other pitfalls to watch out for? 

Thank you for any pointers in this complex area.

 

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Portia profile image
By Portia Nina Levin
09th Aug 2017 15:28

1) To the end of the tax year in which they separate.
2) It depends. Was there a court order or separation agreement?
3) It probably doesn't matter.
4) No.
5) Possibly.

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Replying to Portia Nina Levin:
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By Red Pepper
10th Aug 2017 12:23

Portia Nina Levin wrote:

1) To the end of the tax year in which they separate.
2) It depends. Was there a court order or separation agreement?
3) It probably doesn't matter.
4) No.
5) Possibly.

Hi Portia, thanks for your reply.
They seem to have separated in July 2017 and decree nisi on 30 Mar 17. But the 8 properties are not legally separated yet. There have made gains on the property values. They have decided who will get what, does that constitute an agreement?
The crucial questions relate to the dates - what will be deemed dates of properties transfer.
If disposals fall in 17/18, there may be CGT liabilities?

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Replying to Red Pepper:
Portia profile image
By Portia Nina Levin
10th Aug 2017 12:38

You're probably better off reading this guidance for yourself:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22400p

You would need to have something that would be viewed by a court as having transferred beneficial ownership prior to 6 April 2017. It doesn't sound like you do though.

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By possep
09th Aug 2017 15:30

Surely you could have made a token effort at sourcing this?
https://www.gov.uk/government/publications/husband-and-wife-civil-partne...

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Replying to possep:
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By Accountant A
09th Aug 2017 17:42

possep wrote:

Surely you could have made a token effort at sourcing this?

I typed "CGT divorce" into Google and found lots of (apparently) useful articles on the subject

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Replying to possep:
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By Red Pepper
10th Aug 2017 12:09

I did read this from HMRC and more on the internet etc, but they did not completely answer all the questions !

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Replying to Red Pepper:
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By possep
10th Aug 2017 16:21

This seems to be key. Did any of these apply?

If a transfer occurs between you and your spouse or civil partner after the end of the tax year in which you stop living together, there are rules to decide the date of disposal and the amount of consideration on disposal. These rules depend on your particular circumstances and the information you will need is the date of :
•any decree absolute or dissolution of the civil partnership
•the court order if the asset was transferred by such an order
•any other contract under which the asset was transferred

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By MBK
11th Aug 2017 14:10

Don't forget that, if all is lost, you still potentially have TCGA 92 S248A to fall back on.

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