Private residence relief

Part commercial, tenanted, but the only dwelling owned

Didn't find your answer?

I am sure there has been a lot written on the subject, so happy to be directed to a previous thread.  X and Y bought property B in Aug 2007 - unequal shares (tenants in common).  X already owned another property, A.  Y did not own any other property before the purchase of B.  Property B was run as a Bed & Breakfast establishment, part subject to business rates, part domestic.  X and Y occupied both properties, sometimes sleeping at one, sometimes at the other (they were a few miles apart) until July 2012.  From July 2012 property B was let to tenants on a commercial lease, who continued to run a Bed & Breakfast business, but also used it as their main home.  In March 2016 propery A was sold, and treated as principal residence.  From then on, X and Y rented a property in another part of the country.  So the only property owned by Y has been this property B since Aug 2007, and it is the only property owned by X since March 2016, but neither have lived in it since July 2012.  On the basis that it is the only property owned, is there any capital gains relief available?  The intention is to sell it now, the tenats have just moved out.  The property market is booming, so the increase in value is likely to be £150,000 to £200,000

Replies (12)

Please login or register to join the discussion.

avatar
By Paul Crowley
01st Jun 2021 14:52

Are X & Y married? If so when?
Did X & Y make any elections?
Did X & Y take any professional advice at any time during the ownership of either of the properties?
When the house (A) was sold, was it treated as the only or main residence for the entire period of ownership?

Thanks (0)
avatar
By F1 fan
01st Jun 2021 15:11

X and Y are not married. No elections made. Did not take professional advice! House A was treated as main residence - the fact that it had been lived in part time was not disclosed.
Yes, same property. The intended purchase of a house elsewhere did not happen.

Thanks (0)
avatar
By justsotax
01st Jun 2021 15:39

X&Y can only have one main residence and in the absence of any elections that will be based upon facts.....the property can include a rental property (it doesn't need to be one they own).

Of course given the variables and money at stake a visit to your local adviser would be the best course of action.....(not sure how many marks you get for that in a tax exam....)

Thanks (0)
Replying to justsotax:
avatar
By justsotax
01st Jun 2021 15:45

*scrap that....not married....so can have a main residence each.....but don't let that sway you from the facts....

Thanks (0)
avatar
By Paul Crowley
01st Jun 2021 16:00

With no election it is a question of fact.
X appears to have determined A as only or main, before and after any occupation of B&B.
Y needs to be able to demonstrate where he mainly lived. And could not be living in B&B once let.

But seriously, get proper bespoke advice.
All tax needs sorting within 30 days of completion if B&B is really just a house.

Thanks (0)
avatar
By F1 fan
01st Jun 2021 16:11

Yes, it is just a house. Would the fact that part of the building was subject to business rates mean that part could never have private residence relief? It was advantageous at the time - rates relief reduced the bill to zero, with domestic part in band A.
An option is to move back in - would private residence relief be restored if X and Y lived there for a period?

Thanks (0)
Replying to F1 fan:
avatar
By Tax Dragon
01st Jun 2021 21:09

F1 fan wrote:

would private residence relief be restored if X and Y lived there for a period?

How can you restore something that didn't exist in the first place? (But that's not how the relief works anyway, if you mean what I think you mean.)

Thanks (1)
Replying to F1 fan:
avatar
By Paul Crowley
02nd Jun 2021 02:08

You need someone who understands the rules to do the calculations.
Action now (moving in) will not change the past.

Thanks (0)
Replying to F1 fan:
avatar
By Matrix
02nd Jun 2021 07:21

Not all bad, I expect they got a £10k grant.

Thanks (0)
avatar
By Matrix
02nd Jun 2021 07:12

No PPR for X.

Y gets PPR apart from period where B was rented and excluding the part of the property with business use plus last 9 months.

Thanks (0)
Replying to Matrix:
avatar
By Tax Dragon
02nd Jun 2021 07:35

Your caveats are even more unspoken than Basil's!

OP, please take advice. Matrix is right that PRR is in play, but it's not as stated above. In fact, unless you already knew the answer, you would not be able to discern the answer anywhere in the responses you've had.

The advice will cost a few hundred. The tax saved will be c20 times higher. It's worth doing.

Thanks (0)