CGT on property divided into flats

I have a client, Mrs K, who inherited a four storey house many years ago. At the date she inherited, the house was divided into 4 flats. Flat A had been occupied by the deceased, Flat B was occupied by a tenant who died in 1996, Flat C was vacant and Mrs K already had a 99 year lease granted by the deceased on flat D, which she occupied (and continues to occupy) with her husband. Since 1996, flats A and B have been vacant and flat C is occupied rent-free by Mrs K’s son. Since 1996 the local authority has recognised the property as a single dwelling for council tax purposes.

Question: has Mrs K occupied the whole property as her PPR since 1996 or just flat D?

Lorna Sansom
Blandy & Blandy LLP

Although fact specific you should have reference to the guidance in the capital gains manual (CG64309). In summary if each unit is self contained (i.e. having its own separate bathroom and kitchen) and is capable of being sold separately then HMRC view each unit as a separate dwelling. In that case PPR relief is due only on Flat D.

Paul Davies