1 Minute Guides

Introduction

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Introduction

The family home can give rise to various tax issues. For example, an income tax liability can arise if rental income is received in respect of it (subject to possible ‘rent-a-room relief’ of up to £4,250 a year in 2003/04, for individuals who let furnished accommodation in their only or main residence).

In addition, the family home often represents the single largest asset in an individual’s estate, and the spiralling increase in house values can result in the family home alone being worth more than the owner’s inheritance tax ‘nil rate’ band (£255,000 for 2003/04).

For capital gains tax (CGT) purposes, the gain (or loss) on disposal of an individual’s only or main residence (in the UK or abroad) may be wholly or partly exempt. A gain is completely exempt if the property has been the individual’s only or main residence throughout the period of ownership (or since 31 March 1982, if shorter). This ‘1 minute guide’ considers circumstances in which a gain on disposal of the family home may not be wholly exempt from CGT.