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CGT on 2nd home

CGT on 2nd home

A client inherited half of her parents home some years ago on the death of her mother. Her father continued to live in the house rent free. They must now sell the house and apply the proceeds to buy sheltered accomodation for her father. It seems clear that a CGT liability crystalises on the sale, but is there any prospect of rolling over or otherwise avoiding the CGT on the funds re-invested?


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22nd Jun 2012 13:33

Don't think so

These days rollover relief on a propoerty would tend only to apply to one used in a business and "holdover" relief, should she decide to give her share to her father, would not apply either.

The only thought (from a long time ago) is whether this would qualify for dependent relative relief but that might only be a consideration if the mother died pre 5 April 1988.

Sorry can't think of anything else but maybe someone else will have an idea?


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By LyneT
22nd Jun 2012 13:47

As Paul has said, there is no rollover relief unless this is a business asset.

Although this is no good at the moment, you may want to think in the future about advising clients in a similar situation to leave their share of property to a discretionary trust instead of their child outright.  The surviving partner should be in the class of beneficiary.  In that way the trust will get PPR when the house is eventually sold.  The solicitor should have pointed out the drawbacks of this scheme when the will was drafted.

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23rd Jun 2012 22:12

Is there an argument...
... That the father has the beneficial interest in the property, that the sale proceeds are chargeable to CGT in his hands, and that on sale it will qualify for PPR relief as he has always lived there? Is the father the legal owner of the other half of the property?

Failing that the daughter could reside at the property prior to sale and nominate it as her own Private Residence with HMRC which would secure an element (not full) relief if done properly.

As Paul said rollover relief applies to business assets so not much chance of this applying based upon facts given.

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