Question:
fMy ex-wife and I own a family home which will be transferred to her once all mortgage agreements are arranged. My ex-wife owns a rental property in her pre-married name and is transferring that to me. Would I be liable for capital gains tax (CGT) or would this be negated by living in the property and using it as my permanent residence? Would there be any other taxes to pay?
Arthur Weller replies:
CGT on transfers in a divorce settlement is dependent on the date of the transfer: (a) was it in the tax year of separation; or (b) after the tax year of separation but before the decree absolute; or (c) after the decree absolute, and whether the transfer was through a Court order. See HMRC’s Capital Gains manual at www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22400p, and in particular CG22500. If the family home was your main residence until 18 months before the transfer, the final exemption rule will apply. See also www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65300p, and in particular, CG65319.
