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taxadvisor.uk, Chartered Certified Accountant
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My mother has Alzheimers and has now been in a care home

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Hi
My mother has Alzheimers and has now been in a care home for just under 4 years. She still owns her primary residence, and my Sister (a single parent with 2 Children on a low wage) lives there at no cost (i.e. zero rent) which she heavily relies on.
It's just come to my attention that it could be the case that if someone in a care home retains their primary residence for over 3 years, they could be liable for capital gains tax at the point it is sold. At present the circumstances under which it would be sold are either: a) the money is needed to pay for ongoing care b) my mother passes away and the money from the house sale becomes part of our inheritance.
The house has been owned by my mother (and father previously, he died a number of years ago now) since around 1972 I believe.
Obviously this is hugely concerning as due to my sisters position, we would hope to maximise any inheritance at the time of my mothers passing (or indeed, if the money is needed to fund ongoing care).
I would be grateful for any insight on our likely position with this.
Kind Regards
Damian
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question.Private residence relief is available against capital gain when you dispose of your property that is/has been your main residence during the period of ownership.CGT may be payable on some of the gain if it is not fully covered by private residence relief.In the event there is an element of gain that is chargeable to CGT then you would also claim gains annual amount agianst it and the balnce would be taxed at CGT rate of 18%, 28% or a combination of both depending on total taxable income in the year of sale.The eventual CGT may not be high once these reliefs and allowance are taken into account.Lets say the property is owned for 38 years before finally sold and private residence relief covers 32 years of this period. The portion chargeable is (6/38) 16%.If the total gain is say £150,000, then chargeable gain is (150,000 x 16%) £25,600.Lets say Gains allowance is £11,100. CGT would be on (25,600-11,100) 14,500 at 18% = £2,610.
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Expert:  taxadvisor.uk replied 1 year ago.
As the property has been owned since 1972, this date will be substituted with valuation at 5 Apr 1882 and I have used this as a basis of calculating years of ownership.https://www.gov.uk/capital-gains-tax/market-value I hope this is helpful
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4937
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Customer: replied 1 year ago.
Many thanks for your help - much appreciated ! :)
That puts my mind at rest a little (well, a lot I guess).Kind RegardsDamian
Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.
Best wishes.

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