Council Tax on Family Home & My Other Flat - Main Residence

Cas85

Hi All,

Great forums here, I've been meaning to join for a while!

I was wondering if you could give me your thoughts on paying Council Tax back at my family home which my dad and I live in or keep it on my flat where I live some of the time as well.

The main reason I am considering this is because my father is ill and I am concerned about Capital Gains Tax if I were to sell the house after he passes away.

The situation is:

• I moved to the flat just under 3 years ago from the family home - (same borough, my name went of house CTax and onto Flat)
• My father and I own the house as Joint Tennants
• My half of the house was gifted to me by my mother 5 years after my parents got divorced (2015) - I have been on the deeds since then
• The house is probably worth £1M while the flat about £320k
• My dad wants the house decorated and the leaking roof replaced so the value should rise (My financial involvement hasn't been asked/expected nor could I fund much)
• I spend a lot of time away with my girlfriend who lives on the opposite side of London but between the house and flat I stay equally.
• I would be shocked if my dad lives more than 2 years if no less (he is bed ridden, has mental health issues and requires care 4+ times a day)
• Care is covered by savings so the house is not in danger from that angle

So my question is, should I go back on the house CTax and pay for my flat CTax as a second home (eliminating both our single person discounts)? Will this mean I save Capital Gains Tax?

A little explanation on how the Main Residence tax implications work would be useful if possible too.

Thanks in advance.

CIS

CGT is not an issue which is considered in council tax legislation and case law - this legislation and case law will determine where you are seen as resident for council tax purposes.

The standard is test used is that of the 'reasonable onlooker' - where would they say you were resident if they looked at your position from an outside view point. I would suspect that it would be difficult to argue that the flat is not your residence for council tax purposes.

agrinnall

CIS wrote: »

The standard is test used is that of the 'reasonable onlooker' - where would they say you were resident if they looked at your position from an outside view point. I would suspect that it would be difficult to argue that the flat is not your residence for council tax purposes.

I think that onlooker might well think the same about the house, as the OP says "...between the house and flat I stay equally". If that is literally true then who would make the decision? And what happens if the house and the flat are in different council areas, is there someone independent of both who could decide?

Cas85

Thanks for the replies guys.

In fact I spend time equally at my flat, house and at my girlfriends. On top of this I go on holiday and spend lots of time staying at my mother's and friend's homes. If my dad wasn't dying and my Girlfriend's house/work wasn't on the other side of London my flat would take the majority of my time but it most certainly doesn't.

If I need to tip the balance in one direction so I don't incur potentially 10s/100s of thousands of pounds Tax I will make that change.

1) So what does qualify the house as being my main residence? Say my dad dies next week and I immediately want to sell what is the process of the CGT component? What do people in these sorts of situations provide to prove it is their Main Residence?

2) How would CGT be charged? I was away for almost 3 years, do we take 2 valuations and tax on the difference? Presumably work to decorate/put in new roof could be taken into account but not as direct cash figures, more likely just when making the pre-works estimate?

3) From my understanding I have to live in a home for 3 years before it is my main residence... should I let this point comfortably pass before leaving the flat to avoid 3 years of CGT on it?

4) With the house would I be liable from 2015 when my share was gifted as I only lived there 1 year as owner but in spite of many previous years as living in it as my parents house? (3 years main residence include when I didn't own?)

5) Finally how far back does CGT go, if I move in for x number of years does that eliminate any old period that would have incurred CGT on sale?

CIS

I think that onlooker might well think the same about the house, as the OP says "...between the house and flat I stay equally".

my Girlfriend's house/work wasn't on the other side of London my flat would take the majority of my time but it most certainly doesn't.

He has security of tenure on the flat and returns to live there (and would more so given the circumstances) so it would tick more boxes than the house at which, although he jointly owns, he is there only to stay with the person who is the main resident of that property. I can't see that, if it came to a decision, the flat would not fall to be the main residence.


Craig

Cas85

Thanks for the response Craig.

I didn't say I was only there to stay with my father, I said the fact my father was ill along with other circumstances changes which home I live in more.

I consider both places my home. All my mail goes to the house I have more of my things there, I pay some bills there (phone/internet), I am registered there for HMRC (my tax papers go there), passport, drivers licence etc and I have lived there longer than in the flat.

As far as I am aware I have security of tenure on both homes.

CIS

Cas85 wrote: »

Thanks for the response Craig.

I didn't say I was only there to stay with my father, I said the fact my father was ill along with other circumstances changes which home I live in more.

I consider both places my home. All my mail goes to the house I have more of my things there, I pay some bills there (phone/internet), I am registered there for HMRC (my tax papers go there), passport, drivers licence etc and I have lived there longer than in the flat.

As far as I am aware I have security of tenure on both homes.

What is the your current council tax situation on the flat ?

Cas85

As of 2 years, 10 months I have been paying Council Tax there as a single occupier, not as a second home. However I recently moved back on the electoral role at the house so need to update the council as to what is going on.

00ec25

Cas85 wrote: »

As of 2 years, 10 months I have been paying Council Tax there as a single occupier, not as a second home. However I recently moved back on the electoral role at the house so need to update the council as to what is going on.

so you have been claiming single person discount on a property you did not occupy as your main residence?

Cas85

No, I claimed a single person discount on a property I did have as my main residence but things have changed and it is becoming arguable that it no longer stands as my main residence. This is why I am working out where I stand, where I want to stand, how to make that stance clearer and why I am clarifying things with the council.

Is there anybody knowledgeable who has cand shed some light on the Capital Gains Tax questions I've been asking?

Thanks.

Sibbers123

Council Tax has will not necessarily have an impact of capital gains tax.

If you genuinely spend time at both properties, you can elect what property you want to treat as your main residence - this will only apply from the date the election is made, it is not retrospective.

https://www.gov.uk/tax-sell-home/nominating-a-home

You only get Principal Private Residence (PPR) relief for one property at a time. Therefore, CGT will need to be considered if you were to sell either property.

On the death of your father, there will be no CGT, only Inheritance tax (potentially).

Anyone in your position, with enough funds would be unwise to base their financial decisions based on a free Internet forum. Paid for tailored advice will be worth every penny in the long run.