Tribunal refused CGT relief for renovated ‘home’
The Tribunal recently considered whether a renovated property had ever been the taxpayer’s main residence for CGT purposes.
The Tribunal heard that the appellant and his wife (then his girlfriend) acquired the property in December 1999 and intended that it would become their home.
Inthe event however, the appellant’s wife refused to move in because of unruly neighbours. The appellant then spent some time renovating the property while he and his girlfriend lived elsewhere.
After the appellant completed the renovations, in early 2000, the property was let to tenants. The appellant claimed that he lived in the property for approximately three months before this. He admitted that he did not pay any council tax in respect of the property and had no utility or other bills as evidence of occupation. The property was sold in June 2004.
The tribunal did not accept the appellant’s evidence on crucial issues and described it as "unreliable, vague and sometimes inconsistent". The tribunal did accept that the appellant had occupied the property between December 1999 and February 2000 whilst he was renovating it, but that it had not become his ‘residence’ during this period.
The tribunal also refused to entertain the suggestion that ESC D49 was relevant. That concession relates to a short delay by an owner-occupier in taking up residence, by reason, for example, of carrying out alterations or redecorations. For the concession to apply there must be a subsequent period of use of the house in question by the individual as his only or main residence. In this case there was no period of such use.
The judge determined that the purpose of the acquisition of the property was for improvement and then rental gain. Therefore no main residence relief was due and the gain on disposal was subject to more than £24,000 of tax.