DTE Tax brief on principle residence reliefs

[petergibbinson]

Apologies for putting this here, as it somewhat relates somewhat to my earlier post, but I wanted people's thoughts as this is a specific point.
I downloaded the DTE tax brief on Principle private residence reliefs.

There is a section in there that makes no sense to me from the reading of 222

They say on page 12 (and I won't repeat the wording for copyright purposes!) that if a couple transfer a property, when it is not their main residence at the time of transfer; the relief will be calculated taking into account the the period of ownership of the transferor (i.e. deemed to be backdated to original date of acquisition of the transferor) BUT the entitlement to reliefs is based on the actual circumstances of the transferee spouse (so if the transferee spouse never lived there they would get no relief, or if the transferee lived there for only 1 year before transfer, whilst the transferor lived there for 5 years before transfer (as main residence)..the transferee would get only 1 years worth of relief)
I thought that a property transfer where it wasn't the main residence at the time of transfer was deemed to be no loss no gain from the date of transfer? And that is what 222 (7) suggests to me. But the DTE tax brief says something totally different! I must be missing something? Or the DTE tax brief has it wrong?

Sorry about this!

[Peter D]

Where is the link. It needs the URL i.e http/www xxx xxx x so others can go and read the page you are referring to. Regards Peter

[petergibbinson]

There isn't a link, It's a copy you can pay for and download from the tax books link on the RHS.
I would put the exact wording up but I think that breaches their copyright!
If it is ok to put up the paragraph concerned I am happy to do so.

[Peter D]

Read your emails Peter. Regards Peter

[Peter D]

Your quote of a small section is not for financial gain so put it in quotes and declare the source. The actual wording is important.
Did you use http://www.btc-nw.co.uk/acatalog/Tax_Guides.html
They do a Capital Gaind Guide but was not aware of a PRR guide form them.
Regards

Peter

[petergibbinson]

"if the property is the main residence of the couple at the date of transfer there will be no problem (as ownership will be treated as starting with the beginning of the transferor's ownership period and be based on the transferor's position i.e the transferee inherits the transferor's ownership history and relief entitlements) However if this is not the case, the relief will again be computed taking into account the ownership period of the transferor but by reference to the actual position of the transferee (i.e the transferee is still deemed to have acquired the property backdated to the date of acquisition by the transferor but entitlement to reliefs is based on the transferees own position) In a situation where a husband or wife has owned a property for a number of years and previously occupied it (but no longer occupy it) as their main residence but their spouse has never lived there a pre sale transfer of the property to joint onwership, or worse still, sole ownership, will result in a loss of relief."

From the DTE TAX BRIEF
on
principal private residence reliefs from capital gains tax.
Page 12.

all very peculiar!

[Peter D]

You appear to have missed the "or if the transferee lived there for only 1 year before transfer, whilst the transferor lived there for 5 years before transfer (as main residence)..the transferee would get only 1 years worth of relief)" bit.
This is why Maths comment regarding a new wife after leaving gains PRR was incorrect as I detailed very early on.
This leaves you with the problem that the non PRR years associated to your wifes ownership are exposed to CGT on disposal. Your wife only gets actual peiods of residence not the 36 months. I'll hang fire until you post the missing bit. Regards Peter

[petergibbinson]

that's all of it I was extrapolating..
BUt that DTE tax brief does say that the ownership period is deemed/taken/backdated to the original acquisiton date of the transferor..the only difference is (and their wording is very clear):

Main residence at transfer, Transferee inherits transferor's PRR
NOT main residence at transfer, transferee gets relief based on their actual periods of main residence (with no reference to transferor) i.e they never lived there they get none, they lived there from the outset they get full relief.

Forget abuut my circumstances, I'm looking at whether a no loss no gain inter spouse transfer of property is always "deemed" to be backdated to the date of original purchase by the transferor.
That is exactly what the DTE tax brief says, but 222 (7) suggests that ONLY happens when it is a main residence ...but it may be an incorrect interpretation by them?

[Peter D]

In interspousal transfer of a property back dates the ownership to the date you had a fiancial interst in the ownership of the property. That has never been in question. As I detailed almost at my first response to your question the reliefs do not automatically pass over to the spouse. Regards Peter

[Peter D]

I re-read your last Para.

An inter spousal transfer of a 'property', whether it is you home, your former home or in fact a rental property you have never lived in, or a garage you own, will transfer the property on a no gain, no loss basis and the new owner inherits the original date of purchase.
I am not sure what you are trying to achieve by questioning this. If you are hoping that it only back dates to when you wife moved in, then forget it, I have never come across it.

Regards Peter