CG64955 - Private residence relief: extended ownership period: transfer between husband and wife or between civil partners
Mr J and Miss S each owned a house when they married in 1952.
After they married they used both houses as residences but, because
Mrs J's house was worth more, they nominated that house as the main
residence (a married couple who are living together can only have
one main residence between them, TCGA92/S222 (6), see CG64520). Mrs
J died on 1 February 1989 and her house was transferred to Mr J at
a probate value of £200,000. After his wife's death Mr J moved
out of the couple's main residence and began to live only in the
other residence he owned. The former main residence remained empty
until it was sold on 1 January 1993 for £220,000.
Mr J made a loss on the disposal of the house which is
computed as follows.
| £ | |||
| Disposal proceeds | 220,000 | ||
| less | Cost | 200,000 | |
| Unindexed gain | 20,000 | ||
| less | Indexation | 200,000 x 0.233 | 46,600 |
| Net Loss Emphasis | (26,600) |
Because of private residence relief only part of the net loss
will be an allowable loss, see CG65080+. The result of
Section 222(7)(a) is that Mr J would take over his wife's period
of ownership of the property, see CG64950. But the effect of
Section 223(7) is that the period of ownership for the
purpose of computing relief cannot begin before 31 March
1982, see CG64940-64943.
- Period of ownership 31.3.82 to 1.1.93 = 129 months
- Period of only or main residence 31.3.82 to 1.2.89 = 82 months
- Final period allowed by Section 223(2) = 36 months
| The relief is | 82 + 36 | x £(26,600) = | £(24,331) |
| 129 |
The effect of the relief is to reduce the allowable loss to
£2,269.
NOTE. If a taxpayer is within the charge to Capital Gains
Tax, neither indexation allowance nor taper relief apply to
disposals of assets on or after 6 April 2008. Previously indexation
allowance had been frozen at April 1998. For indexation allowance
see CG17207+ and for taper relief see CG17895+.
