Rent-free occupation: tax position on sale?

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Rent-free occupation: tax position on sale?

Question:

My dad signed his property over to my half-brother in 2000, but continued to live in the property rent- free until two years ago when he went into a nursing home. He has now sold the property. What tax would he have to pay?

Arthur Weller replies:
If your dad only made your half-brother a legal owner, but continued to be the beneficial owner, then it was your dad who sold the house. He will be eligible to principal private residence relief for the period until two years ago, when he moved out, plus the final period exemption of 18 months. That means he will be only liable to tax on the 'middle' six months. But if your half-brother became the beneficial owner in 2000, it was he who sold the house. He will have to pay capital gains tax on the difference between what the house was sold for, and its market value in 2000, without any reliefs (except the annual exemption of £12,000).
 

My dad signed his property over to my half-brother in 2000, but continued to live in the property rent- free until two years ago when he went into a nursing home. He has now sold the property. What tax would he have to pay?

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This question was first printed in Property Tax Insider in March 2020.