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splitting main residence into two

if main residence split into two separate homes and sells one is there capital gains tax?

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My client has owned his house (main residence) since 1991 and because of his 6 children over the years he has increased it with extentions and loft conversions, as the children got older and started to need more indipendance the house was split into two in 2016, the older childen lived in the seperate house (no rent was paid).  the childen have left home now and the one half is being sold.  the two houses come under the local council as two seperate properties so my big question is - will my client have a capital gains liability?? 

thank you for any assistance 

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Replying to lesley.barnes:
Nigel Harris
By Nigel Harris
24th Mar 2021 09:55

This is a nice worked example that appears to answer the original question

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paddle steamer
By DJKL
22nd Mar 2021 16:11

Possibly yes.

What happened in 2016, did some of the earlier works create a separate dwelling, what did the planning permission say re these, were distinct access and egress created re each dwelling at some point, was the change in 2016 re the local authority straight after certain works or a long time after, what occasioned the 2016 change in status to two dwellings for Council Tax purposes?

What about utilities, are these distinct within each dwelling?

Once split did your client only live in/use one dwelling?

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Replying to DJKL:
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By sarahtaylor2018
22nd Mar 2021 16:21

in 2016 stair cases were altered and doors blocked so became two separate properties, planning permission was granted and each property had its own council tax and utility bills, the older children lived in the separate house and no rent was paid to my client, who still had full use of both properties and receives post in his name for both 70 and 70a

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Replying to sarahtaylor2018:
paddle steamer
By DJKL
22nd Mar 2021 16:36

Well, they look like they likely have an A/(A+B) apportionment of the various costs, including the original cost of the initial house. Where certain costs can be solely attributed to the property now to be sold this should be considered.

How do they have full use of both houses? Have they got an election in place re which is their PPR, or does their main use of the to be retained property preclude such an election? (edited)

To me the mail and available for use points are not that significant, how have they themselves (forget their adult family) actually used this second property since 2016?

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Replying to DJKL:
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By sarahtaylor2018
22nd Mar 2021 16:49

the second property has been lived in by three of their children and still use some of the rooms for storage - the garden sheds too are used by my client - its all been very casual with the whole family living between the two properties.

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Replying to sarahtaylor2018:
paddle steamer
By DJKL
22nd Mar 2021 17:06

Well seems to me only one is their PPR and that sounds , as a question of fact, to be the one not being sold.

I do vaguely recall reading something about staff accommodation on estates adjacent to the main house being considered part of a PPR but where this one has been effectively created by division and planning permission I cannot see it as anything but two dwellings, and only one is currently their PPR.

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Replying to DJKL:
By SteveHa
24th Mar 2021 11:22

You're remembering properties within the curtilage of the private residence, which has been the subject of several tribunal cases. usually with regards to permitted area, though really of little relevance to that.

HMRC's manual does a decent job of describing at https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64245

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