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My ex-husband is buying me out of our former home – do I need to pay tax?

<span>Photograph: Peter Dazeley/Getty Images</span>
Photograph: Peter Dazeley/Getty Images

Q I have a tenant in common mortgage with my ex-husband on our former marital home that he has been living in. He is now in a position to buy me out of the property and will either continue to pay the small mortgage or pay it off in full.

We have agreed the price and have started the process of contacting the mortgage lender and so on but I was wondering whether this “sale” would have any tax implications for me?

A You may face a capital gains tax (CGT) bill but then again, you may not. A definitive answer depends on when the transfer (ie the buyout) happens, when you stopped living together and whether you are formally divorced.

There shouldn’t be a CGT bill if – as is likely to apply in your case – you are selling the matrimonial home which benefits from private residence relief. If, on the other hand, you sell a property – such as a buy-to-let house which doesn’t qualify for private residence relief – different rules apply.

There is no CGT bill if you sell your share of the house (or any other asset) to your ex-husband in a tax year when you were still living together for at least part of it.

That’s because you benefit from the no gain/no loss rules for married couples and people in civil partnerships, which makes transfers of assets between spouses and civil partners CGT free.

However, since 6 April 2023, if you are separated, you can transfer assets between you free of CGT until the end of the third tax year after the financial year in which you separated (or, if earlier, the date of your divorce or separation order).

According to his Guide to CGT on Divorce and Separation, published by the barrister Patrick Cannon, transfers between you after the third tax year remain CGT-free if the assets are the subject of a formal separation agreement or divorce order. If they are, there’s no time limit. However, if they are not, there will be a CGT liability.

In the “Money and property” section of its helpful guide Get a Divorce: Step by Step, the government says that “the rules for working out your gain (or loss) are complex” and that you should “contact HM Revenue and Customs or get professional tax help”.