My client sold a property in 2011/12.
She bought the property in 2005 jointly with her father and they both lived in it 2 years. She moved out in 2007. Father carried on living there and died in 2008 at which time she received the other half. It was let for a period until sale.
I have a gain of 30K - total proceeds less half of original cost and then half of probate value. But now i'm stuck on divi-ing it between occupied periods of living in, letting relief.
How would you split the gain to do PPR etc. At first principles half of the gain would be wholly exempt under the normal "owned, lived in, let and then sold" scenario due to last three years and letting relief. And then the other half has been never lived in ie from father's death. Of course I am not saying two assets are being sold, it is just the one house.
We can't apply the last three years to the whole gain as she only lived in half of it.
I am aware of s222(7) which treats ownership as beginning when the daughter bought a share, ie her half. But it then seems a bonus that as well as getting a probate uplift she also can treat the whole property as being one that she did live in, which would then be wholly exempt after PPR, lettings, last 3 years etc.
Any thoughts please?