Tax on sale of family home after separation

leonvquinn

leonvquinn

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For some reason I can't find any clear info on this online anywhere and after talking to accountants and citizens advice but I would have thought it's a fairly common question!?

I'm separated 7 years and have been renting since then while my ex wife stayed in the family home. The divorce is currently going through court but it's amicable. We share custody of the kids 50/50.

We're planning on either:

1. Selling the house and splitting the proceeds in half..

Or

2. Having her new partner buy out my half.

There's no mortgage on the house. I bought it in 2011 for cash with the proceeds of my inheritance.

I simply wanted to know if either of us will have to pay tax on the sale and if so how much is it likely to be?
 
Brendan Burgess said:
I am not a tax specialist, but this happens all the time.

As it was her PPR for the whole period of ownership, there will be no CGT.
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Thank you. You say "her" PPR but it wasn't mine as I've been renting? Will that complicate things?

Also, will the difference in value of the house between when I bought it and when it's sold be an issue I wonder?
 
leonvquinn said:
I bought it in 2011 for cash with the proceeds of my inheritance.
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leonvquinn said:
will the difference in value of the house between when I bought it and when it's sold be an issue
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Can you confirm the party or parties that are currently on the property title? The use of "I" suggests the asset is in your name only.

leonvquinn said:
I simply wanted to know if either of us will have to pay tax on the sale and if so how much is it likely to be?
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Can you confirm the approximate capital gain on the property (i.e. difference between the 2024 market value and the 2011 purchase price)?
 
All of the above are irrelevant. It's a simple transfer of assets (in this case a family home) between spouses in a divorce so no tax or CGT implications. You give her full ownership of the house, she gives you other assets worth half the value of the house. End of story. No tax due by either.
 
Flybytheseat said:
All of the above are irrelevant. It's a simple transfer of assets (in this case a family home) between spouses in a divorce so no tax or CGT implications. You give her full ownership of the house, she gives you other assets worth half the value of the house. End of story. No tax due by either.
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Indeed. But, establishing the ownership and arranging any tax efficient transfer of title under the divorce order (if required) before proceeding with Option 1, if that route was to be chosen, is important.

Option 1 as described above (sell the house and split the proceeds) could potentially result in unnecessary CGT if:

- the OP owns the property 100% (or 50/50),
- has been living elsewhere for 7 of the 13 years of ownership,
- the property is sold, and
- the proceeds split.

Notwithstanding that the transaction (the sale and split of proceeds) may be mandated under decree of divorce, the sale is not a transfer between spouses and there could be CGT in this scenario and less net proceeds to go around.

Arranging affairs so that full ownership is transferred to the party that can get full PPR relief on any sale will result in more net proceeds available to the parties.
 
AAAContributor said:
Can you confirm the party or parties that are currently on the property title? The use of "I" suggests the asset is in your name only.



Can you confirm the approximate capital gain on the property (i.e. difference between the 2024 market value and the 2011 purchase price)?
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I'm the one who provided all the funds to buy the house in 2011 but it's in our joint names. We're also still married technically. The house was bought for €100k and the current value is about €300k.
 
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