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Posted Mon, 06 May 2024 15:49:37 GMT by Fenella Hamilton
I bought a house with six rooms kitchen and bathroom for £180,000 in 2007. The entire property was rewired/replumbed etc., and I installed an additional bathroom, kitchen, heating system, etc., to create a self-contained annexe for my elderly father. The legal title was not split. As he then wouldn't move at the time, I let this out as a holiday let. My father came to live there (rent and bill free as a joint household, he shared meals etc) when the pandemic started. I am now about to sell the property. I think it likely the title will have to be split now to satisfy lenders. Can I deduct a) 1/3rd the initial purchase (=2 of 6 rooms), b) the capital improvement costs (I don't have receipts (fell out with builder who wouldn't then provide same) but was around £35,000, reasonable inference ? - the bathroom, kitchen etc are there!). Finally, as my father wasn't paying rent/bills and we were one household for this time, does Private Residence Relief apply for this period? Thanks.
Posted Tue, 14 May 2024 12:28:05 GMT by HMRC Admin 19

We cannot comment on any situation until after the fact as we might not be in possession of all of the facts and also cannot provide financial advice.

However, we can advise that if the titles between the annex and the original house were split, the apportionment of the initial purchase price between both, would need to be on a just and reasonable basis and consistent between both.  

The new kitchen and bathroom would be a capital cost and again, if no receipts can be provided, a just and reasonable estimate could be used.

You can see guidance on Private Residence Relief here:

CG64311 - Private residence relief: the entity of the dwelling-house: part of the building let

HS283 Private Residence Relief (2024)

Thank you.
Posted Wed, 22 May 2024 10:53:43 GMT by Fenella Hamilton
Thank you for the answers to the first two parts of my query. However, neither of the links have answered my query in relation to my father (who suffered from dementia) staying in the subdivided property during the pandemic. I would clarify that the property was self contained, had it's own entrance (which we had to alarm to prevent his exiting without our knowledge). Nonetheless, this was not a let, he did not pay rent or any bills. Would the period of his occupancy qualify for Private residence relief?
Posted Fri, 24 May 2024 16:18:04 GMT by HMRC Admin 25
Hi Fenella Hamilton
No, Private Residence Relief does not apply as your father is not a legal or beneficial owner of the property.
Thank you. 
Posted Fri, 24 May 2024 18:29:16 GMT by Fenella Hamilton
I don't understand, we had a joint household for this period, and I am the owner and was his carer. Does that not come to the same thing?
Posted Wed, 29 May 2024 10:28:26 GMT by HMRC Admin 21
Hi Fenella Hamilton,
In reply to your question the answer is no.
Thank you.

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