A friend bought a house for his parents in 1962. They lived in it rent free until the last one died in 1990. Since then the house has not been lived in. He believes a figure of 28K that it was valued at in 1982 is the basis of valuation. It has now been valued at 130K and he has been offered that amount by the person in a neighbouring house who wants it for a family member. Can anyone help him to work out his Capital Gains liability. He has been told something about dependant relative relief and that the three years after his mothers death are also not taken into account. Derek.
Capital gains tax on a long empty house.
Apr 07, 2004
3 Replies
Assuming that the parents qualify as dependent relatives ( and the other conditions for the relief are met), then there will be a measure of exemption from CGT. Likewise the final 36 months of ownership are treated as exempt. Based on time apportionment, it would seem that about 11/22ths (i.e.
50%) is exempt.Indexation and taper relief are available, plus the annual exemption (currently 8200) may apply.
Transfer of some of the property to his wife (assuming he has one) prior to disposal may be decrease the CGT further.
He has a wife, they are both in their 70's, they have no children. Would you believe that he also has another empty house? He bought another one in
1989/90 to have his mother nearer him but she died before moving into it. Derek.
No wonder there is a housing shortage. :)
Also, where an individual (spouses counting as one) has more than one possible main residence, there is an option to nominate which one is to be treated as the main residence for CGT purposes.
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