'Primary Residence' regarding CGT While Father in a Care Home

[clearpath]

Just checking to confirm my father can still nominate his flat as his 'primary residence' along with my mother resident there....he has been in care 8 months now away from his original home.

The price they bought it was substantially lower such a long time ago, and just worried there would be no CGT issues kicking in on it now if it was sold, or later after my father had passed away.

Only my mother resides there, never been let out to tenants.

 

[clearpath]

Found this from way back in 2010 so far...it says after 3 years, yes the care home will be the 'primary residence.' and CGT will be payable.
https://www.telegraph.co.uk/finance...Tax-people-in-care-homes-have-to-pay-CGT.html

All this legal stuff has been melting my head all year....the hidden minefields and complex tax lingo, local authority stuff...and, and, and...

...it's not too clear if the CGT would be calculated ONLY from the 3rd year onwards from that old article.

 

[nitram]

To clarify, is your father sole owner of the flat?

 

[Susan11]

Found this from way back in 2010 so far...it says after 3 years, yes the care home will be the 'primary residence.' and CGT will be payable.
https://www.telegraph.co.uk/finance...Tax-people-in-care-homes-have-to-pay-CGT.html

All this legal stuff has been melting my head all year....the hidden minefields and complex tax lingo, local authority stuff...and, and, and...

...it's not too clear if the CGT would be calculated ONLY from the 3rd year onwards from that old article.

Sorry this article says 'could' be liable. Did this change actually come into force?

 

[nitram]

Did this change actually come into force?

Yes

'....Your period of ownership begins on the date you first acquired the dwelling house, or on 31 March 1982 if that is later. It ends when you dispose of it. The final 18 months of your period of ownership always qualify for relief, regardless of how you use the property in that time, as long as the dwelling house has been your only or main residence at some point.

If you are a disabled person or a resident in a care home the final 36 months of ownership may qualify for relief if you do not have any other relevant right in relation to a private residence. Further detail is available in the Capital Gains Manual, see CG64986.....'

https://www.gov.uk/government/publi...ment-helpsheet/hs283-private-residence-relief

 

[jugglingmum]

The correct position from a cgt perspective is that his primary residence is the care home from the date he became a permanent resident but is entitled to 3 years relief.

The gain is calculated based on sales price less original cost and then exemptions taken off. So principal private residence exemption for the time he lived in the property and the care home exemption for the next 3 years. So you don't need to know the value of the property at any intermidiate point. Also there is an annual cgt exemption of around £11500.

@nitram has given the links to the manuals.

If the flat is sold after your father's death there would be no cgt just iht.

 

[clearpath]

To clarify, is your father sole owner of the flat?

My mother owns half but I'm currently trying to find out if they are :-
Joint tenants (100% ownership together) or tenants in common (50/50 ownership).

Can't take much more of all this technical digging and sifting on every area of risk around them both....really fatigued.

 

[clearpath]

Thanks jugglingmum, just saw your fresh post. Another thing not to stress out about.

 

[Susan11]

My mother owns half but I'm currently trying to find out if they are :-
Joint tenants (100% ownership together) or tenants in common (50/50 ownership).

Can't take much more of all this technical digging and sifting on every area of risk around them both....really fatigued.

I think you can probably find out the ownership from the Land registry on line .

 

[nitram]

I understand that CGT is based on beneficial ownership and not legal ownership.

@jugglingmum may correct me.

 

[clearpath]

I understand that CGT is based on beneficial ownership and not legal ownership.

@jugglingmum may correct me.

Hope that subtlety makes no difference to my parents' situation regarding the original Q.

 

[nitram]

Hope that subtlety makes no difference to my parents' situation regarding the original Q.

The flat could be your mother's primary residence for CGT purposes even if your father is the legal owner.

 

[nitram]

The 3 year relief has been reduced to 18 months and I understand it will reduce to 9 months in future.

Is this true for a disabled person or a person in a care home?

https://forum.alzheimers.org.uk/thr...le-father-in-a-care-home.113464/#post-1597815

 

[jugglingmum]

The 3 year relief has been reduced to 18 months and I understand it will reduce to 9 months in future.

The 3 year exemption is specifically applicable when someone moves into a care home so in the case of @clearpath's father it will apply. The detail is included here in para 4 under period of ownership - don't worry about the relevant right to a private residence that doesn't apply in your case based on the facts you've posted:

https://www.gov.uk/government/publi...psheet/hs283-private-residence-relief-2017--2

The relief quoted above by Normelia applies to everyone and is designed to cover the overlap that often arises between buying and selling a property. The reduction from 3 years to 18 months was around 2014ish, and the reduction to 9 months was announced in the October 2018 budget, this is subject to passing into law, the Finance Bill is currently wending it's merry way through the parliamentary process, and when I asked a colleague the other week, isn't due to receive royal assent until early March. Obviously if there is a general election before the finance bill is passed then the 9 months might not be included in a future finance bill.

Note that the lettings relief described in the link above also changes significantly in the current finance bill.

 

[jugglingmum]

Is this true for a disabled person or a person in a care home?

https://forum.alzheimers.org.uk/thr...le-father-in-a-care-home.113464/#post-1597815

See my reply above, @Normaleila is referring to a different exemption.

 

[clearpath]

Thanks everyone for your skillful replies.
These kinds of Q+A's should go in a website PDF or sticky thread as I'm sure time will push this useful info pages deep...though google would probably churn up my post title.