That DTE brief s58 TCGA; s222(7) TCGA etc.

[Peter D]

If you do not like what HMRC have written then take it up with them. They clearly have stated that there will be a CGT liability for the period from the date of acquisition to the time H transferred the property to the Wife and she moved in. The DTE replied to the same question on the 21/9/10. Regards Peter

[Incredulum]

We're just going over old ground, but:

Just read CG64950.

the period of ownership of the transferee is treated by TCGA92/S222 (7)(a) as beginning at the beginning of the period of ownership of the transferor...
The following condition[] must be fulfilled:
1. the residence must be their only or main residence at the date of the transfer.

[Peter D]

Why do you quote that. The property was not there main residence when H transferred to W. Regards Peter

[Incredulum]

The property was not there main residence when H transferred to W. Regards Peter

Quite, therefore CG64950 does not apply, therefore W does not inherit H's acquisition date, therefore W does not have to pay tax on any gain arising prior to 1 May 2007.

[Peter D]

Your forgetting,
"This provision only applies for the purpose of computing private residence relief. It has no effect on the computation of the gain which arises on any disposal by the transferee spouse or by the transferee civil partner." (CG64950) AS they were not living there then The PPR is not computer back to the day the H purchased the property.

And DTE PPR Brief
"the transferee is still deemed to have acquired the property back dated to the date of the acquisition by the transferor but entitlement to relief’s is based on the transferees own position"

So she only gets PPR for the period she has owned and lived in the property ( actual position ) and the prior period is exposed to CGT. Exactly as HMRC have written in their reply.

Regards Peter

[mullet]

I had a previuos reply to my first communication with the CG Department at Trinity Bridge House Salford. Their reply was far to general and after a long telephone converstion they agreed to refer it to a specialst and I whould write to them again. The result of this and 3 months slipping by I got the resonse I posted from Lynx House.

There is a CGT team in Salford but not in Lynx House. So you have not got a "head office" view Peter, and you are unlikely to have found an experienced person let alone a specialist. If you wish to PM me the name of the person who wrote to you from Lynx House I may recognise it as I am based in the south and know a few names there.

[Incredulum]

Your forgetting,
"This provision only applies for the purpose of computing private residence relief. It has no effect on the computation of the gain which arises on any disposal by the transferee spouse or by the transferee civil partner." (CG64950) AS they were not living there then The PPR is not computer back to the day the H purchased the property.

But Peter, I agree that the PPR relief is not computed back to the day H purchased the property. But the W doesn't acquire his acquisition date. She has only owned it since May 2007, and NOTHING in the legislation deems her to have acquired it on any earlier date. The computation of tax is very mechanical, she acquires it on 1 May 2007 with a base cost of £100,000, and as she has lived there for the entire time, her entire gain is relieved with PPR relief.

And [you're forgetting] the DTE PPR Brief

No, you are forgetting the DTE's position on their brief. They wrote:

What the above seems to mean is that actually a transfer might be very beneficial in the type of circumstances outlined in your example... my apologies for the error in the guide and thanks for taking the trouble to point out the correct position in such detail.

[Incredulum]

Just to finish the tale, the 2011 revised version of the DTE brief which has now been sent to me states:

In a situation where only one of a husband/wife or civil partners has owned a property for a number of years but not used it as their main residence, a transfer of the property to joint ownership or sole ownership of the transferee (NB with joint ownership any potential lettings relief may be doubled) can generate a considerable tax saving since the transfer takes place at no gain/no loss and the gain to the transferee (based on the actual ownership period) can be covered (in full or in part depending upon the actual circumstances) by main residence relief if the property is occupied as a main residence post transfer and pre sale.

[maths]

I think my only contribution to this exhaustive debate was:

It has always been very clear in my opinion that the DTE Brief was incorrect. The wording of s222(7) TCGA 1992 is clear.

I agree with the new version.