CGT issue

[jayhay]

My father in law, an elderly widower, lives with us. He has a flat of his own which he rarely visits, but has kept it on (possibly as a symbol of his independence?)

He is now thinking of selling his flat, but does the fact that he has lived with us for several years disqualify him from claiming the flat as his primary residence for CGT purposes following the sale. There has been a substantial increase in its value since he purchased it.

[Peter D]

If this period was less than 36 months since he slept there then there is no issue. Longer than this then there may be a CGT liability but his CG allowance may cover that but without actual dates and figures I can not indicate what liability there may be. Regards Peter

[jayhay]

Thank you Peter. He has continued to pay council tax on his flat and is still registered at the flat for voting purposes etc. His correspondence is addressed to his flat which he collects on a regular basis. Occasionally, if he has an old friend visiting, he will spend a couple of nights at the flat. Should he inform HMRC of his status?

An added consideration is that on his eventual death the flat would be part of his modest estate (under £325,000). At that time CGT would no longer be applicable.

[Peter D]

Difficult one and a bit of a grey area. On the facts provided HMRC would probabley not pick up on the sale but if they did then the 36 months rule may apply and any period of absense should not exceed 36 months. I would need some values and dates to see if the liability would exceed his CG allowance. Regards Peter

[mullet]

any period of absense should not exceed 36 months

A spanner in the works ... in this context absence has to be preceded and followed by genuine occupation as a residence.