Divorce and UK Property
#1
Forum Regular
Thread Starter
Joined: Jul 2013
Posts: 37
Divorce and UK Property
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
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
#2
Re: Divorce and UK Property
For CGT see here https://www.gov.uk/money-property-wh...nship-ends/tax
Stamp duty https://www.moneyadviceservice.org.u...rthern-ireland
Stamp duty https://www.moneyadviceservice.org.u...rthern-ireland
Last edited by spouse of scouse; Jun 8th 2021 at 10:49 am.
#3
Forum Regular
Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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
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
#4
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Thread Starter
Joined: Jul 2013
Posts: 37
Re: Divorce and UK Property
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?
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?
#5
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Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,362
Re: Divorce and UK Property
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.
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.
#6
Forum Regular
Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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.
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.
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 !
#7
Forum Regular
Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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.
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.
#8
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Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,362
Re: Divorce and UK Property
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.
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.
Last edited by louie; Jun 12th 2021 at 11:25 pm.
#9
Forum Regular
Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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.
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.
#10
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Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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 :-)
#11
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Posts: 2,362
Re: Divorce and UK Property
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.
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.
#12
Forum Regular
Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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.
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.
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
Last edited by Mrs M; Jun 13th 2021 at 12:04 pm.
#13
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Thread Starter
Joined: Jul 2013
Posts: 37
Re: Divorce and UK Property
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?
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?
#14
Forum Regular
Joined: Aug 2005
Posts: 116
Re: Divorce and UK Property
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?
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?
Last edited by Mrs M; Jun 22nd 2021 at 11:00 pm.
#15
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Joined: Dec 2002
Location: Keep true friends and puppets close, trust no-one else...
Posts: 93,810
Re: Divorce and UK Property
Oh for the days when BE-ers tried to help each other without any nasty undertones of oneupmanship.....