GCT on sale of gifted property, whilst renting elsewhere.

Dear HMRC. Please can you assist with our CGT conundrum? All values are approximate for ease. My elderly mother (Mrs A) lives on a state pension and has lived in rented accommodation since the early 1990’s. She was gifted a property from her mother (Mrs B) in 1998. At the time of the gift, the property was valued at approximately £40,000. Mrs B, died in 2003 i.e. 4-5 years after the gift was made, at which time the property was valued for probate at circa £65,000. The property has been used by Mrs B, her friends and family since 1998, but she has now decided to sell to an unrelated 3rd party at a market value of c£90,000. During this whole period Mrs A, has lived in the same rented accommodation (when not visiting the gifted property) and has not yet made a ‘Main Residence’ nomination. I have read that where a person has only ever lived in rented accommodation whilst owning another property, that the 2-year rule for nominations does not apply, so can Mrs A now nominate the gifted property as her ‘Main Residence’ meaning that CGT will not be applicable? If so, does this apply from the time of the gift, or are another date? Please can you provide a link to the HMRC guidance on this? If not, how should CGT be calculated and how does the 24% IHT tax (as required by the 7-year rule) affect the gain calculation? - Noting your answer to the previous post - https://community.hmrc.gov.uk/customerforums/cgt/bc406a30-8fc9-ee11-a81c-002248c87680#:~:text=You%20would%20need%20to%20obtain,calculated%20from%20the%20disposal%20value. Mrs A’s income is the basic state pension, plus some interest from savings, but well under the 24/25 personal tax allowance of £12,570. Thank you in advance for your assistance.

ps. not sure if relevant, but Mrs A does not have a formal written tenancy agreement (e.g an AST), but does pay her rent monthly, so not sure if this means that her rented property falls within s222 as per guidance GC64470? Thank you.

Hi,

You can see guidance here:

CG64500 - Private residence relief: only or main residence: two or more residences: late nominations

Thank you.

Thank you for you response. I have read the guidance CG64500 re late nominations, which would imply that as Mrs A was not aware of the need for a nomination that she should now complete a late nomination under S222(5A) TCGA92. Please can you provide a link to that? I presume that, assuming she complies with that, then no CGT liability will be due, however, if she can't comply with that, then how is the CGT liability calculated in the example above please? Thanks again.

Hi,

The tax legislation for S222 (5A) can be found at:

Taxation of Chargeable Gains Act 1992

We cannot comment on scenarios.

Thank you.