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bigduckontax
bigduckontax, Accountant
Category: Tax
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I bought my fathers house from the local authority so that

Customer Question

I bought my fathers house from the local authority so that he could carry on living there until he dies.
He has lived there since 1960 and I bought the property in 1997.
My father is still living there and will do until he passes away. He pays no rent so the property has created no income since 1997 until now.
Can I obtain relief from capital gains tax when it is eventually sold. It was my family home from 1960 until 1974.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer. and pleased to be able to help you with your question. Bad news I am afraid, the key date to this is 6 April 1988. If you bought before this date and the house was occupied by a dependent relative you would have escaped Capital Gains tax (CGT) on the gain on sale. Unfortunately, you did not so you are liable to CGT on any gain made from the purchase cost net to the net selling price. This will be levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale. The gain will be adjusted by the period it was your sole or main domestic residence so only a proportion would fall to CGT. If you had given the house to him you would be in a better position as once the seven year rule on gifts had passed then the CGT liability would have been extinguished. I am so sorry to have to rain on your parade.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.