Are you considering separating?
The timing of separation is crucial.
Why, you ask?
The reason is Capital Gains Tax.
If you own a property that you have not lived in then you are no doubt aware that a sale would trigger what is called “Capital Gains Tax”. This is a tax payable on the gain or rise in the value of the property since its purchase. However, are you aware that if you separate and later transfer this property to your spouse (or indeed have it transferred to you) there is a potential liability for Capital Gains Tax on the gain in value?
If you transfer the property within the tax year of separation then you are able to claim the spousal exemption. For example Mr and Mrs G own two property, the marital home where they live and 5 Block Street which they have always rented out. They separate and issue a divorce on the 8 April 2014. Mr and Mrs G agree that Mrs G will stay in the marital home which will be transferred to her and Mr G will move into 5 Block Street which will be transferred to him. Provided they transfer 5 Block Street before the 4 April 2015 then no Capital Gains Tax will be payable on this property transfer.
If however Mr and Mrs G had separated in September 2013 and had only just reached agreement on financial settlements in May 2014 then both Mr and Mrs G would have a liability to pay Capital Gains Tax on 5 Block Street upon the transfer of the property to Mr G.
Food for thought? Are you thinking about separating, do you have more than one property – talk to us now for advice on the best time to separate.
See link below to HMRC Website for divorce and CGT.
Newnham & Jordan can advise you on all divorce and family related legal matters.
Call us now on 0845 680 7871
This article is intended for general information purposes only and shall not be deemed to be, or constitute legal advice. Newnham & Jordan Solicitors cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article or any external articles it may refer or link to.
Newnham & Jordan Solicitors are proud to annouce the appointment of Fiona Pawsey as a Director
Newnham & Jordan, Solicitors launch a high quality fixed price family law scheme.
Too Good to Be True?
£500 plus VAT plus £410 court fees. That’s a total of £1010.00
We offer a fixed fee if you divorce your husband or wife – which includes not only our fixed fee, but also VAT and the Court fees to issue the petition and apply for decree absolute. And just £300 plus VAT if you are the party being divorced.
That includes up to 1.5 hours free face to face meeting at a time and place of your choosing including weekend and evenings.
For the children, or property and financial or other matters, we will supply you in almost every case, with a fixed quote for each aspect of the work that you will need us to carry out. So you will know from the outset how much it is going to cost you.
So what about those £99 divorces?
Latest Government proposals concerning child maintenance include charges to parents who need state help to agree child maintenance payments.
Under government proposals the CSA, part of the Child Maintenance Enforcement Commission, is to be wound down. The process is planned to begin next year. As part of the proposed new system parents will have to show they have taken reasonable steps to try to reach a private agreement with an ex-partner before being able to use the new child maintenance system. If parents were able to reach an agreement, then it seems unlikely they would have approached the CSA, or any subsequent replacement, in the first place.