Marriage Breakdown Roll-over Ruling and CGT

Hi all,

Could someone out there confirm for me what figures I need to be going off to calculate CGT on a recent sale:

Original Purch Price - $143k
Divorce agreed value - $205k
Sale price - $250k

My interpretation of the rule is that the CGT payable by me is based on the $250k less the $205k? I am not clear on that though so any help would be greatly appreciated!!!

Dos.
 
In regards to marriage breakdowns, the offical "Rollover ruling" stated something like ;

The male / father shall immediately roll over such that the female / mother's nasty vindicative female solicitor has unfettered access to do things that really shouldn't be done to any man.

The CGT provision only kicks in if the female solicitor is unsuccessful on the first attempt.
 
Last edited by a moderator:
Hi all,

Could someone out there confirm for me what figures I need to be going off to calculate CGT on a recent sale:

Original Purch Price - $143k
Divorce agreed value - $205k
Sale price - $250k

My interpretation of the rule is that the CGT payable by me is based on the $250k less the $205k? I am not clear on that though so any help would be greatly appreciated!!!

Dos.

Hi Dos,

I'm guessing you received half of the property at divorce settlement? If so, and assuming the property was always an investment, you pay CGT on the full capital gain. That is, $250k, less cost base of $143.
 
Not enough information.

Was the property an IP prior to divorce, if so for how long, what names was it in?

If there has been a change of title has 12 months passed?

Was $205,000 the true market value?

Cheers

Pete
 
Hi all,

Thanks for the humility Dazz, thankfully it was all semi amicable....

The property was always an IP in both names. As part of the financial settlement, I was made sole owner of the propoerty (under marriage breakdown roll-over) which remained an IP. 12 months has passed since this happened.

Thanks again....
 
Hi Dos

As I understand you would pay 50% of the CGT from purchase to the full property being transferred to you(less 50% if held longer than 12 months.)

Your ex should have paid her 50% on the property transferring to you.

Plus 100% of CGT since property was transferred (less 50% as held longer than 12 months).

Check with your accountant.

Cheers

Pete
 
Hi there,

There is a semi-wonderful provision on marriage breakdown that enables a couple to transfer property without triggering capital gains tax as long as it meets certain conditions. In the past you had to have a court order but now you can do it with a family law agreement.

http://www.ato.gov.au/individuals/content.asp?doc=/content/37174.htm&page=2&H2

If these rules applied and you did not pay capital gains at the time of the breakup, you have inherited the property at the old cost base and now must pay a full capital gain.

So, did you pay capital gains tax at marriage breakdown time?
 
It was all completed through a binding financial agreement and at the time, there was no CGT paid at this point.....

So looks like 50% of the total gain...... Darn it...... :(
 
Or Turk are you saying 50% (IP Discount) of 50% (my half) of the $205k - $143k, plus 50% of the $250 - $205?

That would be a little better.... :)
 
Another reason why tax needs to be taken into account in divorce settlements. Love those people who say oh we dont want to get professionals involved it is too costly. Then one party ends up being severly disadvantaged over the other financially. Oh well live and learn.
 
It was all completed through a binding financial agreement and at the time, there was no CGT paid at this point.....

So looks like 50% of the total gain...... Darn it...... :(

Would have been a Binding Fin Agreement- was there a lawyer involved and did they certify the agreement?

The lawyer will be insured you know.........
 
Agree about people taking short cuts, or the cheap way out, only to be bitten later on. However, we don't know the full story here. Maybe she walked away with an IP too, and if she sells is in a similiar situation. Future tax liability should definately be taken into account when splitting assets, especially when this rollover provision is used.
 
Yes certainly a lesson but one would hope that I don't end up in that situation again...!!

We had several properties that were sold prior to the finalisation of the agreement. But at this time I did not consider these implications. She took the PPOR so would not have paid CGT on that and I kept one of the IP's....

Thank you for all of your knowledge and comments!!

*swallows bitter pill..*
 
Top