RE413 - Interest paid: Loans made before 6 April 1988: Main residence provided for someone else
1999/2000 and earlier years
A loan to buy or improve a property that was used by someone else as a main residence was a qualifying loan if
- the loan was made before 6 April 1988 (or could be treated as if it had been made before 6 April 1988 - see RE410); and
- the property had from before 6 April 1988 been used continuously as the main residence and was still being used as the main residence of
- a divorced or separated husband or wife of the borrower, provided that the separation took place before 6 April 1988, (you do not need to enquire about the personal circumstances of the borrower's divorced or separated wife or husband); or
- a dependent relative of the borrower or the borrower's husband or wife, who was living in the residence rent free and without other consideration.
You could also allow relief if the dependent relative or divorced or separated spouse moved into the residence after 5 April 1988 if
- the property was used by the dependent relative or divorced or separated spouse as a main residence within 12 months of the loan being made; and
- the property was put to no other use in the interval.
You could not allow relief if a different person started using the property as a main residence after 6 April 1988 and the previous occupant no longer lived there.
WHO IS A DEPENDENT RELATIVE
A dependent relative was a relative of the borrower or borrower's spouse who was
- incapacitated by old age or infirmity from maintaining himself or herself; or
- the widowed, divorced or separated mother of either of them.
There was no need to make any enquiries about
- the relative's income;
- `incapacity' if the relative was
- aged 65 or over;
- aged between 55 and 65, unemployed and due to age did not have the capacity to work again in his or her own industry. The test was not met if the relative was unemployed because of a general lack of jobs or because of age, chose not to work; and
- whether the property was provided rent free and without consideration if the relative paid some of the expenses such as rates and repairs.
Send the file with a report to Savings and Pension Schemes,Technical (St John's House, Bootle) if the relative made payments to the borrower which were not wholly covered by Schedule A expenditure on the property.
