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Property CGT Relief?

Property CGT Relief?

Dear Accountingwebbers,

I'm hoping that one of the many experienced contributors will be able to point me in the right direction.

A new client has just told me that he is selling a second property that he purchased for his daughter to live in, to buy a bigger property for his daughter to live in rent free. He has been told by another accountancy firm/estate agent/solicitor that he does not have to pay CGT as he is reinvesting all the income from the sale into the new property. I suspect that they did not have all the information.

Also of note is that the father has not elected that the 2nd property is his primary residence which he has owned for more than 2 years

In my opinion, but please do correct me if I am wrong, business rollover relief does not apply as there was no business.

Given that the house and the mortgage is in the fathers name the entire CGT after the annual allowance will be taxed at 18% based on his marginal tax rate. And, there is no opportunity to use his daughters principle private residence relief.

Am I missing anything here such as another applicable CGT relief?

If someone could confirm I am right or point me in the direction of anything I should look at that would be great.

Many thanks


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By Ruddles
01st Mar 2016 15:15

I would ask the other advisers to cite the statutory authority behind their advice.

Thanks (1)
01st Mar 2016 15:13

I don't think you are missing anything.

Thanks (1)
01st Mar 2016 15:39

Does the father own the property directly or through a trust?

Where the father owns the property personally, you are correct there is no rollover relief in this situation. A residential property (which is not a furnished holiday let) is not a business asset so can't be subject to rollover relief or holdover relief or entrepreneurs' relief. There won't even be any main residence relief, as the person who occupies the property doesn't own it.

However, if a trust was set up when the property was acquired and the daughter was the beneficiary of that trust, it is possible that main residence relief will be due under TCGA 1992 s 225 (private residence occupied under the terms of a settlement). Ask a few more questions.

Thanks (1)
01st Mar 2016 15:53

Are they looking at it as property in a settlement

that is used as the beneficiary's PPR?

EDIT: beaten to it as the phone went before I posted :)

Thanks (1)
01st Mar 2016 16:46

Thanks everyone, a momentary lack of confidence in my knowledge has been restored.

I've already asked about the trust and I am waiting for the answer. I very much doubt that there is one though.

Thanks again for taking the time to respond, much appreciated.

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