House Equity- tax postion

[rocklobster]

I am due to recieve a sum as equity from a divorce settlement. Is this subject to Capital Gains tax?

[themas]

If the money comes from sale of a house which you owned jointly with your ex (or with someone else) then it is not subject to CGT if the house was your sole or main residence. If the house was not your residence then the proceeds (less certain costs) are subject to CGT.

The rules become more complicated if the house was your residence for part of the period of ownership but not for all of it.

If the money is coming from a property which you did not own then it is the reponsibility of the person who has sold it to pay the CGT if any is due, and you should only receive the net amount after this has been paid.

[rocklobster]

Thanks -it is slightly more complicated. I was joint owner , then it became my ex's for the last 16 years or so. I can now claim my equity as my youngest has finished Uni- so the value has gone up since we split up. My ex still lives there and has to buy out my share.

[buildersmate]

It hasn't been your principal private residence then, so some CGT will be payable.

[themas]

Yes, I think some CGT is inevitable, but there could be a real problem in calculating how much in a situation such as you describe. If there is a lot of money at stake it could be worthwhile getting advice from an accountant who is experienced in CGT matters - or your ex should do so as it is probably him who has the CGT liability as he is the sole owner.

Having said that, I'm not sure I understand the position. If he became the sole owner 16 years ago, under what legal provision are you entitled to a share of the equity now? I know that in divorce cases a deferred payment of equity of this kind can happen, but have always understood that the house stays in joint names until the payment is made. If what has occurred is that your interest is secured by a charge on the house (rather than you being a joint owner) then it seems that what you are owed is more in the nature of a debt. If that is the case, then I am not sure that CGT will apply because the debt is a civil matter and nothing to do with realising a capital asset. I may be barking up the wrong tree here, but I would certainly get professional advice on it.