I have a client whose mum transferred the parents home to her children when her husband passed away in 1986.
The property value increase has led to a significant gain since that time but looking up the rules it seems that the client can obtain dependent relative relief as the house was signed over before 1988. The mum lived there rent free until she passed away last year and the house has since been sold (without anyone else living there).
My reading of the rules is that the client qualifies for the relief and is entitled to £40,000 lettings relief (the total gain is approx £500,000).
The question I have (apart from am I correct so far) is that the property was signed over to three of the children so I assume that the £40,000 relief is deducted on the gain before splitting the proceeds between the three children rather than they get £40,000 each? So if the gain was £500,000 for example then after the relief there is £460,000 split three ways giving them a taxable gain of £153,333.33 each?