My client left the former matrimonial home in 2016 and his ex wife continues to occupy, to this day, as her PPR. It is about to be sold and I believe that our client will face a CGT liability on the prorata gain on his share between his departure and the sale (less 18 month exemption) becasue he cannot take advantage of TCGA 92/S225B because the property has not been transferred to his former spouse. This seems unfair given that he has not elected anything else to be his PPR and she will not pay any tax on the disposal by virtue of her continued occupation. Does anyone disagree? (with the conclusion rather than whether it is fair!) Thank you
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Agree and it's fair because PRR is a relief for the house where you live and he hasn't lived there. Or, at least, not all the time.
Sounds about right (and fair)
Where has he been living in the meantime?
And with a bit of planning the gain could probably have been avoided (or substantially reduced) at little expense.
I am intrigued as to the planning.
I am in a similar situation as the OP's client and tax planning in theory is great however when going through separation means some things that would save tax in theory are not practical. Tax was the last thing on my mind!
I think in my case by the time you add in extra months on to end of PPR and split gain then I will not have much of a gain but if there is some way I can save more I would be interested to know.
I also feel it is a little unfair and even more unfair is if I was to buy another house I would be charged stamp duty as if it was my second home even though I have no access to the other house. Now I do know there are ways around this but need a signed finance order which again can be easier said than done.
what were the dates of separation and divorce? presumably the house was in joint names? if the husband was free to return at anytime could he claim that it was still his PPR? moving out is not the only criterion for date of separation. what did the court order say if anything? was the house valued at the date of divorce for asset division purposes. generally i agree with the other correspondents but as you say its worth a quick look
Have a look at this article (bit old but still relevant)
https://www.property-tax-portal.co.uk/taxarticle168.shtml
It says:
"Once the Decree Absolute has been granted, the parties are no longer connected and actual consideration is used to compute any gain" and:
"if possible, sell the property within three years of the date on which the departing spouse moves out to maximise private residence relief".
>> obviously the 3 years is now 18 months.