Absent Daughter PPR

Are there any CGT issues or does PPR relief apply

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Mother & Daughter purchased a property together as their only home 7 years ago, joint mortgage etc, no other owned property.  Soon after the daughter starts spending a lot of time with then residing with boyfriend at his own house, even registers for Council Tax at his address.  Keeps family home as landing pad, place of sanctuary when ill and resides from time to time.  Having split with boyfriend moves back home fully but has now purchased a new home.  The mother wishes to sell the family home and now downsize.  The fear is that the daughter although not having previously owned any other property may not secure PPR relief in full upon disposal and therefore some of the gain will be subject to CGT.  Any direction very much appreciated or if indeed technical, happy to engage commercially

Replies (7)

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By Paul Crowley
03rd Apr 2024 12:28

You are correct, there is a problem. Get a sympathetic accountant to to prepare calculations.
But good news is that daughter will get back some SDLT.

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By lionofludesch
03rd Apr 2024 12:29

Registered for Council Tax doesn't sound like it'll have a happy ending.

What other stuff did she change her address for? Voting? Bank? Doctor?

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By Roland195
03rd Apr 2024 12:36

Assuming the daughter qualified for PPR relief at the start, then I can't imagine that 50 % of the gain after 7 years, costs & allowances and at least some PPR relief would amount to a significant sum.

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By Joe Alderson
03rd Apr 2024 16:57

She may qualify for PPR relief for some periods of the ownership, but you've said enough to suggest it will most likely not apply to the entire period of ownership. This is definitely one of those, pay the right person for the right advice, moments. A mistake could result in paying too much tax, or too little which could lead to having to contend with lengthy compliance checks and penalties from HMRC.

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By kim.shaw-and-co.com
04th Apr 2024 00:05

We don't know why the mother and daughter purchased the property together - often it is because the mother can't get a mortgage and relies on the daughter's borrowing power (for example). In such cases it's usual to see a Declaration of Trust conferring a very small equity % to the daughter rather than joint ownership, which means that there is rarely any gain below the annual exemption.

Is it definitely the case that the tenure of their ownership is joint rather than tenants in common which may be subject to a trust in respect of the equity sharing arrangements ?

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Replying to kim.shaw-and-co.com:
By Not Gone Fishing
04th Apr 2024 07:47

All of your individual responses are very much appreciated and helpful, thank you so much. Kim.shaw your response is particularly interesting and yes indeed this was the case, as they were in partnership working together and this was the only way to raise the mortgage. I very much doubt however will investigate if this was the case. A very good point you have raised and a lesson to be learned by professionals in such scenarios.

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