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PPR relief is not allowed on the sale of property purchased as the residence of an elderly or infirm (‘dependent’) relative. ‘Dependent relative’ is defined as being the owner’s own or their spouse/civil partner’s widowed or separated mother or any other relative who is unable to look after themselves. PPR is allowed on property used by the relative pre 5 April 1988, providing that the relative was the property’s sole resident, living there rent-free and continuing to do so until three years before sale. 

 

Should there have been a change of occupant after 5 April 1988 the exemption is not allowed for the period after the change to the date of sale, even if the new occupant is another dependent relative.

 

David acquired a property on 1 June 1985, selling it on 1 December 2014 realising a gain of £250,000. The house was provided rent-free and without any other consideration as the sole residence of David’s widowed mother from 1 June 1985 to 1 December 1989 when she died. David’s elderly mother-in-law then took up residence.

 

1 June 1985 – 1 December 2014= 354 months

 

Sole residence of dependent relative:

1 June 1985 – 1 December 1989= 54 months 

 

Final period (last 18 months exempt)= 18 months

 

PPR relief allowed:

54 months + 18 months x £250,000        = £50,847

         354 months

Chargeable gain:  £250,000 less PPR of £50,847= £199,153.