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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Private residence relief: separation, divorce or dissolution of civil partnership: computation of gains

The practical effect on the computation of the chargeable gain is to divide the sale proceeds, cost of acquisition, incidental expenses of purchase and sale and any expenditure on improvements, between the spouses or between the civil partners in the ratio of their respective equitable interests. This ratio is applied irrespective of which spouse or civil partner actually bore the expenditure.

The capital gains of each spouse or civil partner should be computed separately and private residence relief considered in relation to their joint period of residence up to the date they separated and any subsequent period of residence of each of them, together with the final period exemption of Section 223(2), see CG64985+.

You should also refer to the instructions at CG74249 if a valuation of each of their shares in the property is needed, for example, at 31 March 1982.

An example which illustrates the effect of recognising an equitable interest is at CG65319.