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Where Taxpayers and Advisers Meet

letting relief

ena
Posts:34
Joined:Wed Aug 06, 2008 3:15 pm

Postby ena » Fri Feb 25, 2005 12:56 am

Three tenants in common own a property. It has been rented in the past but is now the PPR of all three, father, mother and unmarried daughter,it is planned to sell

After PPR relief for the period of residence, the chargeable gain is around £100,000. Can a claim forlettings relief against this chargeable gain be made? If so, and as all three are in residence as their PPR, are they entitled to lettings relief of £40,000 each (£120,000 total), which would eliminate the capital gain?

JSK TAXATION
Posts:200
Joined:Wed Aug 06, 2008 2:18 pm

Postby JSK TAXATION » Fri Feb 25, 2005 1:57 am

Good question!!

My first impression is to say 'no'.

PPR provisions are contained at S222 TCGA 1992 and S222(6) states that only one residence qualifies for PPR where the property is owned between a husband and wife; although Extra Statutory Concession D6 provides some relief where a marriage has broken down.

Because the lettings exemption (S223(4)) merely extends the PPR provisions, one would imagine the Revenue would argue there is only TWO available lettings exemptions in the situation you describe; one for your parents and one for you.

However taking into account annual exemptions, one would imagine that even on this basis, there would be no or little CGT payable.

Please read the above as being on the basis of the limited facts provided.

John KIng ATT
johnking@tax2002.fsnet.co.uk
John S King
Chartered Tax Adviser
e: help@taxation-advice.com
w: http://www.taxation-advice.com
01732 897850

johnfkavanagh
Posts:335
Joined:Wed Aug 06, 2008 3:08 pm

Postby johnfkavanagh » Fri Feb 25, 2005 2:07 am

While married couples can indeed only have main residence between them which qualifies for relief, they are both entitled to the lettings relief on their respective gains, so the maximum relief is in fact £120,000 as the querist states. See Paragraph 64500 of the Inland Revenue Capital Gains Manual which is on the web at:

http://www.inlandrevenue.gov.uk/manuals ... G64716.htm

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com
Tel: 020 7060 1660
Fax: 020 7060 1663
John Kavanagh CTA ATT FRSA
Director, UK Tax Consulting Limited

Instinctive
Posts:1797
Joined:Wed Aug 06, 2008 3:15 pm

Postby Instinctive » Fri Feb 25, 2005 1:13 pm

John is correct. Each joint owner is entitled to a maximum of £40,000 lettings relief. Therefore, you are potentially entitled to lettings relief of £120,000. I say potentially, because the lettings relief is restricted to the lower of (1) £40,000 per person and (2) the share of exempt gains for that person. You will get relief for the full £120,000 only if your exempt gains were at least £120,000 or more.

Ramnik
ramnikrp@hotmail.com


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