Capital Gains on house sale

Coolhandluke

Over 30 years ago whilst still living at home with my parents I purchased what was then a council owned property at a discounted price. Since that time my mother has lived in the property rent free.
My mother is no longer living there and I intend to sell the property this year.  I myself have not lived there for over 30 years. 
The property has increased in price over this time from what I purchased it for. 
Will I be liable for CGT or with my mother having lived there rent free cancel out any CGT? 
If I was to sell or transfer the property into my wife's name would that also cancel out any CGT? 

[Deleted User]

‘Over 30 years ago’. Before or after 5th April 1988? It’s important!

Coolhandluke

Thanks for the reply. 
Yes had gleaned that date as being important. 
Is that the date when I took out the mortgage or the date when I cleared the mortgage and then owned the property outright?
Just checked and the outright purchase of the property was completed in and around 1986 ie I cleared the mortgage and obtained the deeds. 

[Deleted User]

Mortgage is irrelevant. The majority of people buy houses with mortgages. It is simply the date that you purchased the house or, specifically, the date of contract upon which the sale became unconditional.

oldbikebloke

Coolhandluke said:

Is that the date when I took out the mortgage or the date when I cleared the mortgage and then owned the property outright?

neither, it is the date when the council changed the ownership from their name to your name and in precise technical terms, it is actually the date you and the council exchanged the (unconditional) contract for its purchase by you. 
How you funded the purchase cost (by a mortgage) is irrelevant for CGT

as you appear to realise, your line is to try and establish the purchase was for a dependent relative before the deadline. 
CG65550 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

• The dwelling house must have been acquired before 6 April 1988 and the conditions above fulfilled in relation to a dependent relative before that date, see CG65670+.

Good luck with that, which of the following two "conditions" was she in before 6 April 1988: "incapacitated" and/or already a widow/divorcee?
CG65570 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

TCGA92/S226 (6)

There are two categories of persons, listed at TCGA92/S226 (6), who may be regarded as dependent relatives. In relation to an individual these are

• any relative of his or of his wife who is incapacitated by old age or infirmity from maintaining himself or herself,

• his or his wife’s mother who, whether or not incapacitated, is either widowed, or living apart from her husband, or a single woman in consequence of dissolution or annulment of marriage.

[Deleted User]

oldbikebloke said:

Coolhandluke said:

Is that the date when I took out the mortgage or the date when I cleared the mortgage and then owned the property outright?

neither, it is the date when the council changed the ownership from their name to your name and in precise technical terms, it is actually the date you and the council exchanged the (unconditional) contract for its purchase by you. 
How you funded the purchase cost (by a mortgage) is irrelevant for CGT

as you appear to realise, your line is to try and establish the purchase was for a dependent relative before the deadline. Good luck with that as I assume the gain after 30 years is substantial. 
CG65550 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

Obviously as time goes on these cases reduce. Given that we are talking about almost 33 years ago there must surely be more emphasis on proving that someone was a dependent relative in 1988. Another issue where good luck might be required. 

oldbikebloke

[Deleted User] said:

Obviously as time goes on these cases reduce. Given that we are talking about almost 33 years ago there must surely be more emphasis on proving that someone was a dependent relative in 1988. Another issue where good luck might be required. 

yes, you quoted my post before I had finished editing / adding to it to make that exact point

Coolhandluke

Thanks for the replies. I can see what you mean around the term "dependant"
Transferring it into my wife's name for her to sell wouldn't be an option either I assume? Would she then be liable for any CGT?
The 1988 deadline, is that the date the house was acquired prior to that and that my mother had to be dependent on or  before that date? 

[Deleted User]

Transferring the house to your wife would make no difference. The transfer would be at ‘no gain / no loss’. This means that she would be deemed to have acquired the house when you did at the same value. 

Your second assumption is correct.

Jeremy535897

It used to be the case that a transfer of a property between spouses at a time when it was not their (or presumably by extension the dependent relative's) main residence would not benefit from the deemed acquisition date of the transferor (section 222(7)TCGA 1992), which in this case would have ruled out any possibility of dependent relative main residence relief, but this seems to have been amended by Finance Act 2020.

Coolhandluke

Looking like it's gonna be a big hit then, is there any way of reducing the amount I'd be liable for? Any way of actually finding out how much the CGT will be? Is it a percentage of the profit less any improvements that were carried out?