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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Person owns a home and a second property. Sells second property

Resolved Question:

Person owns a home and a second property. Sells second property in 2015 makes a gain of 200K. Second property had a dependent relative living in it from 1968 until 2012. Few years later sells main home and makes a gain of say 150K. Can both dependent relative relief and own home relief be claimed?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

To what use was the second property put to after 2012?
Customer: replied 2 years ago.

It was vacant.

Expert:  TonyTax replied 2 years ago.

Thanks.

Provided the criteria for dependent relative relief as set out here were met as at 5 April 1988, then the relief can be claimed for the period from 31 March 1982 using the value of the property on that date as the cost to 2012 when I assume the property ceased to be occupied by the dependent relative. The gain for the last 18 months of ownership will also qualify for main residence relief. So, there may be a small proportion of the gain which is not exempt depending when the sale occurred.

The fact that you may qualify for dependent relative relief on one property does not preclude you from claiming main residence relief on the property you lived in.

Take a look at HS283 for more information on the main home and CGT. There is a section on dependent relative relief.

I hope this helps but let me know if you have any further questions.

Customer: replied 2 years ago.

Thank you, ***** ***** helpful. So looking at the Nationwide property price information, the house was worth 25900 in March 1982. Given that, coupled with the dependent relative relief from 1982 to 2012, the disposal proceeds were 206,000, with cost of sales being £4715.40, what CGT should we be planning for?

Expert:  TonyTax replied 2 years ago.
When in 2012 did the dependent relative stop living in the property? When was it sold?
Customer: replied 2 years ago.

December 2012, and it was sold two days ago.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I do some calculations. It will take a while.
Expert:  TonyTax replied 2 years ago.
If the gain is £200,000 (it will be less assuming the March 1982 value was greater than the original cost) then that part of the gain to December 2012 will be covered by main residence relief.

The period from 1 April 1982 to May 2015 is 398 months and the gain for that period is exempt from CGT. From January 2013 to May 2015 is 29 months and the gain for the last 18 months will be exempt so there are only 11 months worth of gain that are taxable which equates £5,528 (£200,000 / 398 x 11). That will be covered by the annual CGT exemption of £11,100 so there will be no CGT to pay.
Customer: replied 2 years ago.

Thanks. You say March 82 to December 12 is covered by main residence relief. Do you mean dependent relative relieve? The property was never been lived in my the owner, only by the dependent relative.

Expert:  TonyTax replied 2 years ago.
Yes I do. It's the same relief in effect but you qualify because of the dependent relative.
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