Be it through real estate or in shares, accumulating investments is financially fruitful, especially when you purchase them alongside your partner. However, legal separations can create financial complications that may involve tax implications on your part. Separating from your partner is never easy, to begin with, and is often made more complex by having to navigate financial investments. Along with a family solicitor, you can explore the various options that come with managing investments after you separate from your partner.

Option #1 – Selling the Investment

If purchased after 1985, Capital Gains Tax (CGT) may be payable when selling an investment. You can calculate this formula yourself or seek the help of an accountant. If selling a jointly-owned investment, the CGT is payable on each party’s marginal tax rates.

Pending the calculation of CGT liabilities, monies can be used to pay them off if an order states that part of the net sale proceeds is placed into a trust account. The remaining monies are then distributed as per the said agreement.

If there is negative equity or debt left to pay after the investment is sold, work with your family lawyer to determine who is liable to pay. This may be dictated by your separate incomes, the capacity at which each party can reasonably pay, and what other assets may be available.

Option #2 – The Sole Investor Keeps the Stake

If you are the sole owner of an investment, the process is fairly simple—you keep it. Without any stamp duty to pay, no CGT to calculate, and no transfers to be made, the steps to take are relatively straightforward.

What you may need, however, is a means to refinance the mortgage to pay your former partner. To ensure that this payout is tax-effective, work closely with a financial advisor to structure the refinance.

Option #3 – Transferring the Investment if it’s Made Under Joint Names

If not processed intelligently, an investment transfer can cost you a pretty penny. If you’re transferring an asset to your former partner, as part of a family law property settlement, or to a third party who is opting to purchase the property, the government will attach a stamp duty to it. There may also be potential for a CGT liability.

If you consensually have the transfer performed by Orders, you can put yourself up for stamp duty exemption and a CGT rollover relief, which, in short, means there is nothing to pay. However, if the person keeping the investment decides to sell it at a later date, the CGT may be payable eventually.

Conclusion

When it comes to separation, financial and family law disputes can be a difficult process to maneuver. With assets on the line, working with a family solicitor can streamline the process and ensure the best possible outcome. Whether through a Binding Financial Agreement or otherwise, settling financial disputes at the end of a relationship is much easier with help. At Springfield Legals, we help couples leverage our mediation services and dispute resolutions by linking them up with the best family law solicitors in Ipswich. Whether in need of help to steer parenting arrangements, child support, and more, we’re here to make the process easier.