CGT on second home

by **Jon R** on Thu Aug 13, 2009 2:23 pm

I have a client who sold a property in 2003 realising a gain of £80,000 (not held in joint names).
The property had been rented out for 13 years as the client resided with her new civil partner.
Shortly after selling the property she decided to purchase a further property for rental purposes.
I appreciate that PPR can be claimed on the disposal together with the CGT Allowance, however is there any scope for making an election to defer the gain taking into account many years have passed.
It may be worth mentioning that my client volunteered this information when HMRC discovered that she was receiving rental income from her new property but not reporting it, as a consequence returns for 2003/2004 to date need to be prepared

by **VacationPete** on Thu Aug 13, 2009 4:21 pm

With a sale date of 2003 taper relief and may be indexation is available depending on the purchase date. Any PPR relief is not transferable and remember to calculate Letting Relief.

Regards Peter

by **Peter D** on Mon Aug 17, 2009 11:17 am

I should add that Letting Relief will only be available on the PPR property and it appears that she has not disclosed the rental income on that property so LR can not be claimed. However you should address this matter to at least know what the damage may be. Regards Peter

by **maths** on Thu Aug 20, 2009 3:38 pm

Peter D

she has not disclosed the rental income on that property so LR can not be claimed.

I can see no reason why LR should not be available on a disposal of the property whether or not the rental income therefrom has been declared.

Assuming the property was at sometime a PPR and the property was de facto let out then the appropriate conditions for LR are satisfied.

Any comment?

by **Peter D** on Thu Aug 20, 2009 6:49 pm

Without rental income dislosure to HMRC they usually refuse Letting Relief. Had many cases of this. After reptropectively declaring income and paying any IT due and penalties they do allow LR. Regards Peter

by **maths** on Thu Aug 20, 2009 7:57 pm

Whilst I am aware that HMRC do sometimes adopt this practical approach I am unsure as to the technical justification and do not believe they are correct.

Any other views?

by **Peter D** on Thu Aug 20, 2009 8:20 pm

If a property is not identified as a rental business by either notification, or SA declared losses or gains against the rental income then LR is not usually granted. Why would they do that. Regards Peter

by **maths** on Thu Aug 20, 2009 8:56 pm

The issue is not in my opinion "why would they do that" but on what grounds can they deny LR where the conditions for it are satisfied; such conditions not including the requirement that any rental income has been previously declared.