Having introduced reforms to the taxation systems in the 2026 Budget, the government has now clarified as part of its consultation process how properties transferred under family law property divisions will be assessed in the new regime.
Changes were introduced that meant that capital gains tax treatment and the ability to use so called ‘negative gearing’ (offsetting losses on a property against other unrelated income) were no longer going to be available for established homes purchased after 12 May 2026. This raised a concern that a family law transfer occurring after this date may mean the property would be considered as having been purchased after that date, losing the older tax treatment.
After this concern was raised, the government has now introduced amendments to provide that property acquired as part of a family law separation process (whether through a Court order or through a binding Financial Agreement) will retain the tax treatment it would have had if it had not been transferred.
This mirrors the so-called ‘rollover relief’ parties get when they transfer properties which means that you do not have to pay capital gains tax at the time you transfer a property under a family law transfer, but only upon its actual sale, and it is treated as if it was always yours.
It is vital that your lawyer is on top of these types of issues in an evolving environment – call us or email to find out some more and see how your situation might apply for the above scenarios.
