CGT on property parents lived in rent free

by **maths** on Wed Mar 10, 2010 3:03 pm

Incredulum

I am afraid we are straying into territory in relation to which I have limited expertise (although that doesn't normally stop me pontificating !!).

Suffice it to say that an AST requires that the tenant has exclusive occupation of the property which I believe in this instance the parents do not have.

by **melville** on Wed Mar 10, 2010 4:06 pm

Thanks for the input everyone.

Just to clarify, my parents lived there exclusively. I didnt even have a key once I moved out.

by **Peter D** on Wed Mar 10, 2010 4:27 pm

Not that is changes my vue but who paid for the maintenance on the property, the gas board service and safety certificate, required by law if you are renting a property out. As you say in your thread title "Rent Free". Regards Peter

by **maths** on Wed Mar 10, 2010 5:11 pm

Small but important point; it is not whether, de facto, your parents lived there exclusively but whether as of right they had exclusive occupation.

by **Incredulum** on Wed Mar 10, 2010 6:46 pm

I've never pontificated in my life...

Ever!

I agree an AST requires exclusive occupation. Quite clearly (to me) the parents viewed the house as "theirs". They had exclusive occupation - their son didn't even have a key!

Alice has been asking questions on the landlordzone forum.

http://www.landlordzone.co.uk/forums/showthread.php?p=197297&posted=1#post197297

But what if they didn't have exclusive occupation? What if they occupy on a licence as lodgers? Does this really change matters? No. You don't need a tenancy for a property to be "let".

Let's look at a different scenario. X is a wealthy gentleman of quite some age who lives in Chelsea in a rambling house. He doesn't really like living on his own, so rents out three spare bedrooms to lodgers. He doesn't need money, the lodgers are children of friends. So he charges them £250 per month each. (Market rent would be, what, £1000++ pcm.) He declares the income on his tax return as it is above rentaroom. Eventually he sells the property at a massive gain.

Oops-a-daisies. Three lodgers means that he doesn't get PPR relief on the whole thing. But are you really saying that he doesn't qualify for 223 (4) relief? Or would you be trying to argue that because they were only lodgers then there was no letting?

Just going back to Peter D's reference to this having been closed down through dep relative relief. It's a wholly different thing. "Letting relief" is not really "letting relief", it is a part of PPR relief.

by **mullet** on Wed Mar 10, 2010 7:46 pm

We should remember that lettings relief is available in respect of small hotels and guest houses, as long as the entity itself is a dwellinghouse. CG64723. No "tenancy" as such there, but generally a written agreement for services to be provided in return for consideration.

by **Peter D** on Wed Mar 10, 2010 9:35 pm

"Just going back to Peter D's reference to this having been closed down through dep relative relief. It's a wholly different thing. "Letting relief" is not really "letting relief", it is a part of PPR relief."

Not what I said. Stick to the facts. Regards Peter

by **Peter D** on Wed Mar 10, 2010 9:39 pm

There is no indication that the OP intended to be his parents landlord and there has been no evidence to support the fact that he was, and that they were tenants. Regards Peter

by **mullet** on Wed Mar 10, 2010 9:56 pm

Surely, regardless of whether or not it was someone's intention to become a landlord or tenant, those labels should logically be applied to anyone who appears to be a landlord or tenant?

landlord - 1. a man who leases land or property. 2 a man who keeps lodgings or a boarding house
tenant - a person who rents land or property from a landlord
rent - a tenant’s regular payment to a landlord for the use of property or land

(All from Oxford on-line dictionary)

by **Incredulum** on Thu Mar 11, 2010 9:43 am

Peter D wrote:There is no indication that the OP intended to be his parents landlord and there has been no evidence to support the fact that he was, and that they were tenants. Regards Peter

222 (4) relief "letting relief" applies to licences as well as to tenancies. Grrrr.

Repeats himself again.

Peter D wrote:"Just going back to Peter D's reference to this having been closed down through dep relative relief. It's a wholly different thing. "Letting relief" is not really "letting relief", it is a part of PPR relief."

Not what I said. Stick to the facts. Regards Peter

Exactly what you wrote.

Peter D wrote:This was all locked out when they closed off Dependant Relatives CGT exemption, even if the paid you a £ a week LR was not available. Regards Peter

Dependent relative relief is not available if any consideration is paid s226 (1).

Letting Relief is only available if the property is let, i.e. consideration IS paid.