CGT liability if main home sold in 2 parts?

dave2

If we were to assume that the flat currently does not qualify for PPR, if you moved in it would then part-qualify (there's a minimum period of time for this, can't put my finger on it at the moment).

It would not trigger the previous letting period for letting relief. But, if you subsequently moved out and began letting the flat, this second period would qualify for letting relief. Has to be residence then letting.

Perhaps the first question we should have asked in this whole thread was whether the gain on the flat + any other capital gains in the year of disposal (e.g. shares) is likely to exceed £10,100 each. If not then the whole gain falls into the annual exemption so (other than amusing us with an interesting case) the rest is moot.

00ec25

dave2 wrote: »

(there's a minimum period of time for this, can't put my finger on it at the moment

this query is often raised and the answer is no there is no minimum period of occupation to "qualify" the property as a main residence.

The test of residency (where you have not made a valid election to nominate a specific property as the main residence) is based purely on the "quality" of the occupation as already referred to above. That is a subjective assessment based on many factors, only one of which is the period of occupation.

dave2

Hmm, at the time I checked this, I think against a HMRC manual, which typically I can no longer find. Going back to TCGA s223(4) however does say quite clearly "at any time in his period of ownership". I shall have to assume an error either by myself or some rouge manual.

glasgow_oldie

Thank you for all these useful comments, even if not generally containing welcome news.

I realize that the fact that we let the basement now complicates things, and in retrospect, we would never have done so if we realized that PPR would be lost. The rent has been pitiful, a lot of hassle, and we would be far better off just having left the basement empty.

I assume that we would have obtained PPR on the whole place if we bought it as a single title, with a single council tax band, all the floors are interconnected, had not rented the basement and sold it as a single unit.
My original question was: would the situation be any different if the main residence is split into 2 parts and sold separately? I can find no answer in any of the HMRC documents.

dave2

I know much of above is confusing as there has been a lot of back-and-forth on a very complex and not well defined issue.

I think the point to take away is that the flat never qualified for PPR. The letting thing is at most an indicator pointing to the fact that the flat is a separate property. Is it not itself the fact that led to PPR not applying.

Hesitant as I should be to speak on behalf of others, but I think that is the broad consensus we have arrived at. But it would be fair to say there is still some grumbling in the back and that none of us would want you to take what we've said as 100% conclusive. I still think there's a possibility that on inspection of the premises we'd arrive at a different view. I'm thinking of the Edwardian townhouses in Edinburgh, where you have the basement which used to be the servants quarters. In some cases these have been turned into quite independent flats with internal doors bricked up, and in other cases they are simply used as storage, utility room etc and quite clearly still form part of the one property.

There is no difference if you sell the properties together or in separate sales. Well, were you to sell them together there may be some room for negotiation on how much of the sale price was for the flat (thus impacting the gain calculation).