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Transfer of jointly owned property

Transfer of jointly owned property

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Hopefully someone can clarify my understanding of the rollover relief available on the exchange of land between two people who currently hold it as joint tenants.

Basically two brothers are going to swap half of a plot they own with each other. They will then build a house on the land and live in their new houses.

I understand rollover relief as per TCGA 1992/S248A is available apart from on excluded land (S248C)

'Land is excluded to the extent that it is a dwelling house used as the landowners only or main residence such that on disposal at any time during the 6 years after the date of the acquisition of the acquired interest the whole of part of the gain is relieved under the PPR provisions.

Does this mean they cannot move in for six years after acquisition or that they cannot sell within six years?

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By Portia Nina Levin
06th Jan 2016 17:33

Not in these circumstances.

At the time of exchange the land is not a dwelling house; it is just land that one of the brothers intends to build a dwelling house on. So the requirements of section 248C(1)(a) for the land to be excluded land are not met.

That means that the section 222(7) and Henke will then have the effect that there will still be a chargeable gain in respect of the period when joint ownership commenced (for the land in question) and the newly built houses are occupied as the individuals' main residences.

If the land were already dwelling houses the same relief would be afforded by section 248E.

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By Jigs
06th Jan 2016 19:31

Thanks for this I think I understand now, rollover relief is available on the change of ownership of the land prior to the build (248a) but when they subsequently sell the house they may be in a position of a chargeable gain on the basis that the period prior to build will be included when calculating PPR, and such a period would not qualify.

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