PPR relief on divorce and ESC D6
Question:
A couple is getting divorced. House is jointly owned. They want the wife to live in the house until the kids are grown up (some 6 years) and then sell the house and share any excess equally or as agreed.
My understanding is that to benefit from ESC D6 the Husband has to transfer his share to the wife before a sale to a third party. Otherwise he will be liable for CGT on his share of the gain. Is this correct?
Secondly, for stamp duty purposes, does this transfer need to be in the Court Order to be exempt from stamp duty?
Any other thoughts welcome. He has no other property and will rent.
Answer:
My understanding is that to benefit from ESC 6 the Husband has to transfer his share to the wife before a sale to a third party. Otherwise he will be liable for CGT on his share of the gain. Is this correct?
Yes, this is correct.He would need to transfer back to his wife for the period of absence to be deemed occupation.
Secondly, for stamp duty purposes, does this transfer need to be in the Court Order to be exempt from stamp duty?
Not necessarily. If there was no chargeable consideration (including no liabilities/mortgage) then there would be no stamp duty.
The other option could be for the husband to be entitled to just a share in the proceeds under a court order, with the wife charged on the gain in her name.
About the Author
The Author of this article/answer is our site Editor, Lee Hadnum. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.
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