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Where Taxpayers and Advisers Meet

CGT/PRR

freddie2
Posts: 1
Joined: Wed Mar 13, 2019 3:15 pm

CGT/PRR

Postby freddie2 » Wed Mar 13, 2019 3:23 pm

Hi, I have a CGT question relating to private residence relief I would really appreciate some help with. My friend split up with her husband in March 2018 and she has been renting since then while he has remained in the family home. She is now trying to agree a consent order for sale of the house and they have provisionally agreed a sale by September 2020. She is now concerned that as the relief reduces to 9 months (from 18 months) in April 2020 she would only get relief for the final 9 months so that, assuming a sale in Sep 2020 she would be liable for CGT for the period March 2018 – December 2019. Is that right and if so does “sale” for the purposes of the tax mean exchange of contracts or completion?

Very grateful for any thoughts.

AGoodman
Posts: 711
Joined: Fri May 16, 2014 3:47 pm

Re: CGT/PRR

Postby AGoodman » Wed Mar 13, 2019 7:50 pm

A sale takes place for CGT when there is an unconditional exchange of contracts (ie not conditional on any particular event occurring).

Your thoughts on the timing are correct but if they have owned (and lived in) the house for some time this may only be a small proportion of the gain.

If the proportion (or the gain) are small enough, the unrelieved part could be absorbed by her annual allowance (currently £11,700).

The other possibility, which may be impractical, is to use lettings relief. This has to be a commercial let but if she and her husband granted the husband a tenancy whereby she received 50% of open market rent (reflecting the fact he owns 50%), up to £40k of any gain could be covered by PPR (capped at 50% of the total gain).

maths
Posts: 7477
Joined: Wed Aug 06, 2008 3:25 pm

Re: CGT/PRR

Postby maths » Wed Mar 13, 2019 9:52 pm

If an asset is transferred pursuant to a court order the disposal for CGT is the date of the order assuming the order does not precede the decree absolute.


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