CGT Liability on Sale of Family Home for Separated Spouse

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There appears to be a CGT liability on the proceeds arising from the eventual sale of a family home which is payable by that spouse who had earlier moved out due to separation. While this tax was probably never intended to target separated spouses who are not in any way speculators, this tax ruling still stands and is a very unfair hit on anyone caught up in such an unfortunate situation. Does anyone know if the Revenue make an exception in the case of separated spouses who are obviously not engaged in property speculation of any kind, or just how rigoursly if at all they pursue such cases?... or of any loopholes or exceptions? (all legal of course). It would be nice to think they'd turn a blind & understanding eye in such cases, but somehow I've got a bad feeling on this one. Any advice most welcome!

 

[mf1]

I'm not sure of the question/problem here. A family home is only a family home when a married couple ordinarily reside there. A principal private residence is where someone ordinarily resides there. If a separated spouse moves out of the family home, is it a family home or not? Similarly, if a separated spouse moves out of their PPR and buys another PPR, why would the first home be their PPR? And why would they end up selling what was the family home? And if the house was kept in joint names, is it not reasonably obvious that if one has a new PPR that CGT would be payable on their share of the sale price? And finally, you only pay CGT on a gain, so why is this an issue?

mf

 

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I'm not sure of the question/problem here. A family home is only a family home when a married couple ordinarily reside there. A principal private residence is where someone ordinarily resides there. If a separated spouse moves out of the family home, is it a family home or not? Similarly, if a separated spouse moves out of their PPR and buys another PPR, why would the first home be their PPR? And why would they end up selling what was the family home? And if the house was kept in joint names, is it not reasonably obvious that if one has a new PPR that CGT would be payable on their share of the sale price? And finally, you only pay CGT on a gain, so why is this an issue?

mf

A lot of questions you've raised there mf. Firstly I should have used PPR instead of family home. Secondly, buying a new home after moving out was financially out of the question and so we're just talking about rented accomodation here and not a new house purchase. Thirdly the family home (previous PPR) gets sold as part of divorce proceedings after the mandatory 4 year separation period and each party gets their share of the proceeds. Fourthly, it would not be reasonably obvious to many that a spouse who takes the difficult choice of leaving their home should be financially penalised further down the line by a tax law targeted primarily at speculators but which drags them also into it's net. And finally, the "gain" becomes in reality only an illusion when one is trying to use the sale proceeds towards the purchase of a new home in an already inflated market. Not only does this tax reduce the sum available, but comes as a double whammy on top of the stamp duty liability since the first time buyer exemption of course no longer applies.

 

[asdfg]

since the first time buyer exemption of course no longer applies

See [broken link removed] under "Are there any special situations where a person who is not a first time buyer can avail of first time buyer relief?"

 

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See [broken link removed] under "Are there any special situations where a person who is not a first time buyer can avail of first time buyer relief?"

Thanks for that. As I understand it a separated spouse can only avail of the first time buyer exemption if they have retained no financial interest in the original family home upon separation, which is not the case in my situation.

 

[asdfg]

As I understand it a separated spouse can only avail of the first time buyer exemption if they have retained no financial interest in the original family home upon separation, which is not the case in my situation.

Maybe I'm completely wrong here and I am not a solicitor. If the house is sold you no longer have a financial interest in the family home

Have you talked to a solicitor about this?
Maybe some solicitors who post on AAM can help

 

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Maybe I'm completely wrong here and I am not a solicitor. If the house is sold you no longer have a financial interest in the family home
Have you talked to a solicitor about this?
Maybe some solicitors who post on AAM can help

It would appear according to (b) in the FAQ link you posted [broken link removed] that I would not qualify as a FTB, but I'll still definitely check out the stamp duty angle more thoroughly whenever it gets to that stage & thanks again for that. However my initial query & main concern now is the CGT issue from the forthcoming sale.