Principal Residence Relief

I have a client who is selling her late mother’s property. The property was originally in her late mother’s and my client’s names as JTs. Following her mother’s death, it vests in her sole name.

She owns another property, in which her estranged husband lives. She does not reside there; she lives in her mother’s property.

For CGT purposes, I believe the client needs to elect which property she regards as her principal residence and that this needs to take place prior to exchange. However, I am not actually sure how you do so. Is there a specific form, or is it just a case of her regarding the mother’s property as her principal residence?

Any guidance would be greatly appreciated.

Martyn Dixon
Harold Bell Infields & Co.

Tax when you sell your home: Nominating a home - GOV.UK.

Thank you. Thats what I found also, but couldn’t believe that was all that was required. Any idea what branch of HMRC to write to?

When I dealt with this in the past, I drafted a letter for a client to sign addressed to the PAYE and Self Assessment HMRC address as they were registered for Self Assessment.

I doubt a nomination is strictly necessary. s226(5) TCGA only requires a nomination of a main residence out of two or more residences. The husband’s house is not in fact a residence of hers at all. Though if it has been she will get some measure of relief on disposal. But it can do no harm to make it. I take it that they are not “living together” within s1011(c) ITA 2007 so he does not have to sign the nomination under s226(6)!

Jack Harper

I agree with Jack. The client does not have two residences. The property she owns in which her estranged husband lives is not a residence of hers (as she doesn’t even live there). She therefore only possesses one residence. TCGA 1992 s222(5) is irrelevant (Jack’s statutory reference to s226(6) is a typo).

Regarding Jack’s comment that “But it can do no harm to make it.” I am not in sympathy with such an approach. I am not in favour of supplying information to HMRC which is gratuitous; you never know! Based on Martyn’s post the CGT position seems very clear and no nomination is necessary.

Malcolm Finney

Might be worth having a read of HS283.

Malcolm Finney