Private residence relief - mobile home then new build
My client purchased 40 acres of farmland and lived in a mobile home in one corner for about five years. Soon after acquisition, a garden/living area was created extending to about an acre and a large shed was constructed thereon and used for personal storage and as a garage for the private/business car and tractor. The client then obtained permission to construct a dwelling adjacent to the mobile home within the garden area (with an agricultural tie). The house has been used as the private residence for the past three years. Now the entire holding has been sold with a very large gain. I am concerned that the Revenue may argue that the dwelling house has only been a residence for three years out of the eight and that the gain on the house and garden may therefore only attract PRR to the extent of three/eighths.
A colleague has suggested that PRR should be allowed on the entire gain (excluding, of course, the other 39 acres of farmland) as the garden was used as part of the previous residence and to all intents and purposes the whole of the corner area has been the main residence throughout. This makes complete sense and this must happen frequently as many self-builders start off living in a mobile home while they build the house... but will the Revenue see it this way as the "dwelling house" has only been in existence for three years?