Capital Gains Relief

Capital Gains Relief

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Just a quick question 

My wife owned a property with her previous partner since 1998 but split with him and moved out in 2001.

We decided to purchase the property in 2009 (she still owned her share between 2001 and 2009) from him at a reduced price due to the condition of the property with a plan of living there in the near future once renovated. Due to change in situation we had to sell in 2011 and made a profit. We own the home we live in since 2001 and still do. 

What proportion of private residence allowance can my wife claim as she lived there from 1998 to 2001 but not between 2001 and when we brought it together (2009) nor between 2009 and 2011 (sale).

Thanks in advance. 

Replies (7)

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By cohen
28th Jan 2015 18:37

Private Residence Relief will apply to the period during which the property was her only or main residence. Based upon what you've said, this looks as though it will be from 1998, until she moved out in 2001.

The final 36 months of ownership should also be exempt.

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By martyn77
28th Jan 2015 18:40

That is what I thought

So we need to work out the number of months she lived there + 36 months? And the number of months ownership.

Thanks

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By cohen
28th Jan 2015 19:03

Yes, her share of the gain is apportioned over the total period of ownership (i.e. from purchase to sale), and the element during which it was her main residence (plus the final 36 months) is covered by the PRR.

So in rough terms, from your initial post it should be something like 1998 to 2011 = 13 years of ownership, of which 1998 to 2001 = 3 years + final 3 years = 6 years exempt.

You will have the exact dates, and as you mention, this calculation is usually done in months.

 

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By TaxationPete
28th Jan 2015 20:45

Was the property let out between 2001 and 2009 or did her ex live there. Why the delay in declaring this disposal. Regards Peter

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By ShirleyM
28th Jan 2015 21:05

I was wondering the same thing, TaxationPete

This capital gain should have been declared on the 2011 or 2012 returns, dependent upon which month the sale took place.

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By martyn77
29th Jan 2015 08:20

Yes I have been told its the 11/12 return. No the property was not let. He could not afford to buy her out. She should have been paid some sort of rent for her share but that never happened unfortunately. 

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By martyn77
29th Jan 2015 08:43

expenses

We also incurred around £60,000 expenses - do we need to allocate 50/50 or if my wife paid for say 75% of the expenses she can use 75% against her gain and I use 25%?

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