Care home & Capital Gains Tax on former residence

artha

If someone goes into care for dementia is this considered a permanent move i.e. does this become their place of residence. If so does this mean that the house they owned becomes liable to CGT if it is sold as it is no longer their home?

EdInvestor

Only for the period after they have entered the home, and there are vearious reliefs and allowances which will normally mean no tax is payable unless the property is kept for many years.

artha

EdInvestor wrote: »

Only for the period after they have entered the home, and there are vearious reliefs and allowances which will normally mean no tax is payable unless the property is kept for many years.

Thanks for the reply but I'm not sure that I'm any the wiser in practical terms. This is a real situation where the owner of the property has gone in to care and is able to just self fund through state&occupational pension&attendance allowance. The children have EPA and are going to let the property to supplement income to pay for any extra care that may be needed in the future e.g. nursing care. If the person lives for a long gtime and existing funds run out (say in 5-10 years) and the property needs to be sold does it become subject to CGT? I appreciate thet there is a threshold allowance but bgiven that the property has quadrupled in value since purchase ther could be a substantial amount to pay if it were sold by by the original resident.

monkeyspanner

First step would be to get a valuation at the time of the owner going into care. CGT would only be liable on any increase in value after that date and as edinvestor says there is an allowance i.e. the final 36 months of ownership are treated as if you had lived there provided it is your only or primary residence. In addition if the person has been in care for a while the value has probably decreased over the last 18months.

Relevant section of the IR site is here:
http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm#2

including this section:
Absences as you've moved out of your home
You may still get the full relief even if you didn't live in your home all of the time that you owned it. The final 36 months (3 years) that you own it will be treated as if you lived there, even if you didn't, as long as the property has been your only or main home at some time during the time that you owned it.