CGT Private residence relief/dependent relative

by **StefanT** on Thu Feb 02, 2012 1:43 pm

After my father died in 1962 my mother, my brother and I inherited our family house (split in three equal parts).

I lived in the house with my mother till 1996. My mother passed away in June 2007. The house is a “one family” type and till her death neither my brother nor I could even think of selling our parts.

Now we are close to a sale.

I would appreciate any thoughts and advices if the whole period 31 March 1982 - June 2007 could qualify for private residence relief/dependent relative in my CGT calculation related to the 1/3 of the potential proceeds.

by **maths** on Thu Feb 02, 2012 3:28 pm

After my father died in 1962 my mother, my brother and I inherited our family house (split in three equal parts).

I lived in the house with my mother till 1996. My mother passed away in June 2007. The house is a “one family” type and till her death neither my brother nor I could even think of selling our parts.

Now we are close to a sale.

I would appreciate any thoughts and advices if the whole period 31 March 1982 - June 2007 could qualify for private residence relief/dependent relative in my CGT calculation related to the 1/3 of the potential proceeds.

You appear to have owned 1/3rd of the house and lived in it from 1982 (periods before are irrelevant) to 1996; this period together with an additional 3 years qualifies for CGT exemption (ie 17 years). Between 1997 and 2012 you have not lived in it ie for 15 years.

In essence 17/32ths of any gain attributable to your 1/3rd is CGT exempt with 15/32ths of any gain less £10,600 being subject to CGT at 18% or 28%.

I assume the property has not been let.

On your mother's death her 1/3rd would be acquired by beneficiaries under her will at its then market value; any gain attributable to this third between 2007 and 2012 is likely to be subject to CGT depending upon who acquired it and if they lived in it or let it.

Dependant relative relief is inapplicable as your mother lived there as she owned part of it; it was not therefore provided for her.

by **StefanT** on Thu Feb 02, 2012 4:43 pm

Thank you very much for your comprehensive answer.

There is another detail.

The house is not in the UK.
Till 1996 I was working for a local subsidiary of a UK company in my native country. In 1996 my employer asked me to move to the UK. Initially I lived in the UK in a rented dwelling and on a regular basis I was visiting my home (4-5 times a year). In 2001 due to some company restructuring I took a job with another company (again in the UK). I continued renting till 2003 when I bought a house in the UK where I have been living ever since (and I believe since 2003 this is my private residence). For tax purposes I am UK resident and domicile.

In your opinion are they any other years from the period between 1997 and 2003 that could qualify for CGT exemption in addition to the 17 years mentioned in your posting?

by **Peter D** on Thu Feb 02, 2012 10:35 pm

In what country is the property and what are the residence and property rules there. Regards Peter

by **StefanT** on Fri Feb 03, 2012 10:00 am

The property is in Bulgaria.

I am not sure about the residence rules related to property ownership. If they exit then they quite possibly will be linked to citizenship.
Regarding the capital gains - the law is very simple. If you have own the property for more than three years - no CGT.

by **Peter D** on Fri Feb 03, 2012 10:36 am

I assume you are UK resident so there may be no CGT on disposal if you only dispose on one property.
However UK tax regulations apply on the disposal of worldwide asset, so your gain on disposal will be taxable, PPR will apply for the period you lived and owned a share of the property and the last 36 months will be exempt Read HS283 on the HMRC web site. The net gain will be taxed at 18% or 28% depending on your UK marginal tax threshhold. Regards Peter

by **StefanT** on Fri Feb 03, 2012 12:46 pm

Thx Peter!

The HS283 is about private residence relief and this is the area where the remaining part of the initial question stays.

In your opinion based on the following timeline:
1962 - the family house inherited
31 March 1982
1996 – relocated to the UK on an employer’s request. Living in a rented dwelling. UK resident.
2001 – company restructure. Job with a new company. Living in a rented dwelling.
2003 – house bought in the UK. No letter sent to HMRC for a choice of PPR.
2012 – intended sale of the family house. Still in the UK.
how many of the 30 years between 1982 and 2012 could qualify for PPR relief?

I didn’t live on a regular base in the property post 1996. So this could be considered as the end of the period qualifying for PPR relief.

On the other hand my first relocation was on my employer’s request. So I wonder if I may use:
“Working abroad
If you have been working abroad you will normally be treated as though you have lived in the UK property, and so qualify for Private Residence Relief, provided that both of the following apply to you:
1. you live in the property both before and after your absence
2. you have no other home which qualifies for private residence relief
This relief also applies when it is your husband, wife or civil partner who was working abroad.
You will still get Private Residence Relief for your time abroad, even if you do not return to live in the UK house, provided that the only reason you do not come back to live in your former home is that the employer requires you (or your husband, wife or civil partner) to work elsewhere.”

Unfortunately it looks like (1) kills this as an option in general?

But then again the last paragraph says:
You will still get Private Residence Relief for your time abroad, even if you do not return to live in the UK (BG?) house, provided that the only reason you do not come back to live in your former home is that the employer requires you (or your husband, wife or civil partner) to work elsewhere.

Though perhaps I still do not qualify for it as after 2001 it was my choice to start a new job with a company in the UK (abroad in my case) and it was not employer driven?

So 1996, 2001 or 2003 closes the PPR relief period?

Your help is appreciated.
Regards, Stefan

by **Peter D** on Fri Feb 03, 2012 5:31 pm

I'm afraid that is not what the regulation states read CG65030.
".Any periods of absence of any length throughout which the individual is working in an office or employment all the duties of which are performed outside the United Kingdom" I do not believe this applies to the property being in another country.
Perhaps someone else with clarify this.

Regards Peter

by **mullet** on Fri Feb 03, 2012 6:02 pm

I agree with Peter. Section 223 TCGA 1992 does not explicitly state that the "periods of absence relating to employment" rules apply only to a property situated in the United Kingdom, but it is certainly inferred by giving up to 4 years' relief for work in the UK and unlimited relief for work outside the UK.

by **StefanT** on Fri Feb 03, 2012 6:20 pm

Is not the whole picture reversed in my case? Or I am confused what “abroad” is?

I have been living in the UK (which for me is “abroad’) and I am still “abroad”. I am planning to sell a property (in BG which for me is not “abroad”) and the reason for not living there is because I have taken a job “abroad”?