nhs84

Brief summary:
Together with partner for 14 years
Bought London apartment 13 years ago (but deeds and mortgage solely in his name)
Been married for 10 years
Moved to Australia 4 years ago
Rented out London property
Getting divorced now through a UK lawyer and UK courts

We've agreed to split the sale of the property profits and costs 50/50. However, I would like to buy the property and keep it as an investment property until I return in a few years time more than likely.

My question if I buy the property, do I / we still have to pay stamp duty and CGT?
What is needed to avoid paying these ie: documentation?
How can I calculate what the CGT would have been if we were to sell to someone else?
Is any of this impacted if I want to add an additional person to the new mortgage?
Does anyone have any recommendations for expat mortgages on buy-to-let properties? I've qualified with HSBC but would like to explore other options too.

Thanks

spouse of scouse

For CGT see here https://www.gov.uk/money-property-wh...nship-ends/tax

Stamp duty https://www.moneyadviceservice.org.u...rthern-ireland

Mrs M

I can give you a definite answer to this question. The asset in your case a property will be valued and a price agreed. You each have a liability therefore the person who sells their share will pay their tax liability whereas the person who keeps the property does not pay their share at that time. Eventually when the property is sold the person who keeps the property will pay the gain accrued from capital growth from the moment they became the sole owner pus their share of the earlier gain. If you want any advice i can help i had a bitter divorce over 4 years! there isn't much I do not know we had several properties along wit a house etc in Australia.

nhs84

Sorry to hear! But thanks for the advice.

Great to know my CGT will be deferred. How would we calculate what the CGT will be?
And given it is its a now an 'investment' property, does that change things with CGT or Stamp Duty?

louie

With respect, I don't think you can. I think you may have overlooked the fact that the OP does not have any share of the property currently.

This is complicated and you (or more accurately your spouse) may (almost certainly will) need a good UK accountant's advice. For starters though, your situation depends partly on when you separated and if the transfer happens before your divorce. Have a look at the link in spouse of scouse's post.

That said, assuming that you and your spouse lived in the property (as your main home) from when it was acquired to when you left the UK, the CGT now due is likely to be relatively small (compared with the increase in value) as most of the gain will be exempt due to "principal private residence relief". Even that's not straightforward as there are now several ways to calculate the gain. I think though that the rules regarding you "inheriting" PPR relief on your eventual sale might have changed adversely for you in recent years; I'm not up to date on this. To be honest, you would be sensible to take advice ASAP - definitely before the transfer - as putting a strategy together now may well means savings in the long run. I know accountants' fees can be hefty but generally so can CGT given London property prices.

The CGT reporting and liability will be due 30 days after the transfer; you can't leave it until you do your annual tax return as used to be the case.

And don't forget there will be Australian CGT consequences too, assuming your spouse is still over here. Maybe get a good UK / Australian tax accountant! Maybe try asking the Institute of Chartered Accountants in England and Wales or the Institute of Taxation for a recommendation. A tiny proportion of even specialist tax accountants will ever have encountered this situation in their working lives.

Mrs M

Nonsense you are complicating the issue! I have lots of experience in the property field as i buy /sell/ rent properties as a career.
You weaved a few simple facts about primary residence. That isn't rocket science. Lol!
It is straightforward but you did offer good advice regarding employing an accountant who is experienced in the field.

Good luck !

Mrs M

Oh I forgot to correct you on your first sentence. It is irrelevant who's name the property is in (Fact) In a 50/50 Clean break ALL assets ALL liabilities are joint my friend. You see D.I.V O..R.C.E. Is the predominant factor the assets are valued and the liabilities are joint but if one chooses not to dispose of their share at that point in time then they are NOT liable until they dispose of the asset I have been through it and assure you i am correct and perhaps along the line LOUIE will confirm the point.

louie

Err... no. Maybe you are confusing divorce and tax law, I don't know. However, I can assure you that the OP will have no CGT liability on any disposal of a property in which they have no interest.

It is not possible to give the OP any advice on their position, without knowing a lot more about it. I said it is complicated because it is. The only sure thing is that your advice ("You each have a liability") is wrong, as things stand.

To the OP: the link previously provided is a starting point and there is more information here - https://www.gov.uk/government/public...d-spouses-2021. Incidentally that confirms "You and your spouse or civil partner are treated as separate individuals for Capital Gains Tax purposes. Each of you will pay tax only on your own gains". As you can see, whether you and your spouse are separated, either legally or "in such circumstances that the separation is likely to be permanent", and if so, when, is the starting point for working out your (and your spouse's) position and the options you may have to time and structure the transfer of the property to minimise either the overall or your own future CGT liability (not necessarily the same thing).

You do need good, paid, advice.

I can't remember if it was the ICAEW or the CIOT but one of them used to provide to its members a list of other members who were happy to provide advice to members who were not comfortable of their expertise in particular areas (for a fee of course!). In other words, members who considered themselves experts. It would be worth exploring whether you are able to access this list if you contact those bodies.

Mrs M

OMG!! I cannot be bothered to bat off rubbish comments for the last time! this couple have a 50%liability on everything! They do have an interest I owned property in my sole name but when the divorce arose my ex wife also had to share the tax burden. you are talking nonsense of course the op has a liability as all assets within a marriage are joint as are debts. end of! If you are married and you had a massive credit card bill in your name but your wife didn't its irrelevant she is still liable for the debt its 50/50 I will say no more. Promise! Lol!

Mrs M

I broke my promise to say one more thing...... You are correct to say.... Each one is liable but during the process each one would pay their personal liabilities and debts then the pot is added up and divided 50/50 therefore the couple can make their own arrangements to ensure equal division. Personally each of them could engage a lawyer each fill out a Form E And the lawyers will ensure the procedure is carried out to completion. Divorce lawyers engage accountants, valuers etc etc. Good luck whatever :-)

louie

So you are saying HMRC's published guidance on the subject (referred to and quoted above) is wrong? Interesting.

I still can't help but feel you are confusing divorce and tax law.

If your wife included the disposal of an asset which you owned in your sole name in her tax return and paid capital gains tax on it, it may not be too late to rectify this depending on when this happened.

Mrs M

It really is a case of cross wires. The fact as I see it..... The couple are getting a divorce, they agreed a 50/50 split. Of course the husband will pay the liability which is in HIS name but in the eyes of the law all debts and all assets are equal when a couple are in a long term marriage.
Therefore the couple will simply get a valuation on the said property and agree a price at that point the C.G.T. Liability can be worked out and revenue paid. The property is then transferred to the partner but they one way or another will have to pay half of the C.G.T. Negotiated at the end of the financial remedy all liabilities are joint it does not matter who's name it is in. But....... If the property is transferred the person that keeps it will not need to pay their share of the C.G.T Until they dispose of the property

If you bought a house in 2000 for 500k you got married in 2010 and divorce in 2020 lets say the asset went up to 750k the gain is 250k after allowances the gain we shall say for arguments sake is 200k that means tax is due on that amount and because we are taxed as individuals you would pay your share of C.G.T.
The wife who has the property does not pay her share at that moment because she has not disposed of her share. if 5 years past and she decided to sell she would have pay her share of the earlier C.G.T Plus and gain from 750k.

If H had a credit card debt of 30k no savings

W had no debt but savings of 50k the credit debt would be divided as would the 50k

Of course the husband must pay it because it is in his name but ultimately its all shared. I personally had 3rd and final hearings and 2 further hearings at a cost of 80k in legal fees over a 4 year period my ex had over 100k in lawyers fees. It was a complete and utter waste of time and money but if there is one party that will not agree then it is determined by law which is expensive.

The best solution is to agree between the couple swapping apples for pears etc but as long as its equalised it makes no difference

nhs84

Thanks all!

So I've spoken to HMRC and I was told that if we agree to split everything 50/50 in a sale to an external party, then we both pay CGT on our share of the profit minus the free allowance we each get.
If I 'buy' the other half of the property, then he pays CGT on his 50% minus the allowance and mine is deferred until I sell.
Apparently the fact it's in his name is irrelevant.

However, we didn't talk about timelines. If we separated in April 2020 and only file for divorce in October 2021, would this still be the case if the consent orders stipulate the information about the transfer being in connection with a divorce?

Mrs M

Excellent! And that is exactly what I said would be the case.... I think someone owes me an apology. Lol! Louie. Always good to know the facts before trying to shoot someone down who was helping with facts they were aware of ;-)

Pollyana

Oh for the days when BE-ers tried to help each other without any nasty undertones of oneupmanship.....