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My clients have lived in their only or main residence for twelve years and have received planning permission for a loft conversion, which will have a separate entrance, and it will then be sold as a flat on a long lease.
Would only or main residence relief be available on the disposal, or would TCGA 1992, s 224(3) apply? Would renting the property for a period of time make any difference?
Readers' thoughts are welcome.
Query T17,041 – Flatman.
My clients have lived in their only or main residence for twelve years and have received planning permission for a loft conversion which will have a separate entrance and it will then be sold as a flat on a long lease.
Would only or main residence relief be available on the disposal or would TCGA 1992 s 224(3) apply? Would renting the property for a period of time make any difference?
Readers' thoughts are welcome.
Query T17 041 – Flatman.
Reply by Scorpio:
I believe that TCGA 1992 s 224(3) is a piece of anti-avoidance legislation brought in to catch exactly this type of situation. The section itself is fairly widely drawn and denies main residence exemption in cases where the original acquisition or subsequent expenditure was incurred wholly or partly to realise a gain.
There is some helpful guidance within the Tax Bulletin 12 (August 1994) which...
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