A gift of a former PPR to a daughter is being contemplated. As W is younger and healthier it makes sense for H to gift his 50% to W so she can make the PET for IHT purposes (HMRC don't usually treat this as an assocaied operation - see IHTM14833).
It appears that W can still rely on the fact that she's owned a 50% interest in the property during the time it was used as the couple's PPR, with the additional 50% interest being effectively an enhancement of her existing interest.
Section 222(7) TCGA 1992 states the period of ownership where the individual has had different interests at different times shall be taken to begin from the first acquisition taken into account in arriving at the expenditure which under Chapter III of Part II is allowable as a deduction in the computation of the gain. Subsections (a) & (b) are not in point because the property is not currently their main residence, so W does not inherit H's PPR history, but it would appear she can rely on her original interest such that the PPR history will apply to the contemplated disposal of a 100% interest to her daughter. The property has not been let.
Do readers agree?
Replies (10)
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I'm not sure if I understand the question anymore.
If the house has never been the couple's main residence, then the wife acquires her interest in 1994, when she obtains her first interest. If you're hoping to get relief because the house was the main residence of a dependent relative, then the wife isn't going to get the relief. Assuming the husband had his then 100% interest before 6/4/88, then he gets the relief, to the extent that he makes the disposal.
I'm not sure that's correct. You might fall over the bracketed requirement "provided as mentioned above" in s226(3). How was H providing the accommodation after 1994 to the extent that he did not then own the property?
I get that he had 100% in 1988. What I'm querying is whether he meets the requirement in s226(3). He can't provide something he doesn't have. He doesn't have half the house.
Not that I am aware of; s222(7) is a deeming rule ("...shall be taken to....") specifically in relation to the period of ownership. Being deemed to own something doesn't mean you are able to provide it to someone else.
Note further that s226 does not deem the residence to be that of the taxpayer. What it says is that relief is due as if it were his or her residence.
There's quite a delicate interpretation to do here. I am not sure I have done it correctly - as you see, I have changed my mind at least once today.
What it says is that relief is due as if it were his or her residence.
I didn't even get that quite right did I? My head is quite thick and achy today. But this is an interesting (to me) thread and I'll come back to it when head is thinner and hurts less.
I think I may have been misreading it. The ss says: if the house ceases to be the sole residence (provided as I mentioned), then...
I was reading it as: if the house ceases to be provided as I mentioned, then...
So, as you were. Apologies for any confusion. It's best to read the legislation though.