Valuations, Expert Evidence, Capital Gains Tax, & Private Residence Relief

Valuations of your home, business, assets, pensions, and gathering expert evidence regarding payment of capital gains tax are all part of the process of dividing your marital assets, finances and pensions in your divorce. There has to be figures of how much things are worth.

If you are sorting out your divorce between yourselves or through mediation, you can arrange all these valuations and reports yourselves at minimal cost. If you are going through the court process of dividing your marital assets, finances and pensions, then the court will order these valuations and reports. These valuations and reports must comply with Part 25 of the Family Procedure Rules 2010.

If solicitors are involved in your divorce, then my advice is, if you and your ex-partner can arrange these valuations and reports yourself outside of solicitors, please do so. In the hands of solicitors, you are looking at huge costs as the solicitors will be writing, arranging, and handling these valuations, reports, and letters. 

The court will no doubt order joint reports and valuations which will be paid for by both parties, but you can ask the judge if you want your own separate reports and valuations. You must have valid reasons.

A point to note is that you are not allowed to file any expert evidence or valuations without the permission of the court.

VALUATION OF YOUR MARITAL HOME

In my opinion, this is best done by a local estate agent rather than a chartered surveyor, because your local estate agent will be aware of the realistic selling price of your marital home as this is their day to day job – selling homes in your area.

You will find using an estate agent is much cheaper than using a chartered surveyor who usually charges huge fees. Normally, 3 separate valuations are required by 3 separate estate agents in your area.

SAVING TIP – If you DO NOT tell the estate agent that the valuation is for the divorce court but you want to put it on the market, you can get your valuation for free.

You can also use an online home valuation guide which is free most of the time.

EXPERT VALUATIONS/EVIDENCE

Before you instruct valuations of other marital assets, such as cherished plates or precious stones, you should shop around and see who can do the valuations the cheapest. Ask the expert evaluator, if you could do some of the research yourself and give it to them prior to instruction. This could perhaps save costs. 

CAPITAL GAINS TAX (CGT) AND PRIVATE RESIDENCE RELIEF (PRR)

The law changes regularly regarding this matter, so please look it up and read the government website. Here, I will give you a brief overview so you learn the basics of what this is. Please click on the link below for up to date information from the government website.

LINK TO GOVERNMENT WEBSITE FOR CAPITAL GAINS TAX AND PRIVATE RESIDENCE RELIEF IN DIVORCE

The law says, you need to pay capital gains tax on all marital assets, including the marital home that are sold or transferred during a divorce unless you lived together for part of the tax year that you transferred the marital asset – a tax year is from 6th April to 5th April. In this case, there is no tax to pay under the no loss/no gain tax law. If you haven’t lived together, you will have to pay this tax. A valuation will be required of the asset (near the date of transfer) to calculate the tax.

If any assets are transferred between you and your ex-partner after your divorce, capital gains tax could be payable.

Private residence relief is a capital gains tax relief that you can claim when you sell or transfer a marital home. You can claim this relief for the time you have lived in the marital home as your main residence. You must have lived there for the last 3 years of ownership. If you have only lived in the marital home part of the time, then the private residence relief is reduced. If your marital home is sold or transferred within 3 years of separation, the sale is capital gains tax exempt as long as it is transferred to the ex-partner who remained in the home and the ex-partner who moved out has not elected to treat another property as their main residence. If the house is sold or transferred more than 3 years after separation, your share of the capital gain may be taxable. Whoever carries on living at the marital home after separation, will qualify for private residence relief.