Malcolm Finney examines how cohabitees are subject to capital gains tax on disposals of an only or main residence.
Capital gains arising on disposals of interests in residential property are subject to capital gains tax (CGT) at a rate of 18% if they fall within the basic rate band of an individual, and 28% for higher rate individuals.
However, a CGT exemption applies to a gain arising on a dwelling house where, throughout the period of ownership, the property was the taxpayer’s only or main residence (TCGA 1992, s 222). The part of any gain attributable to periods of non-occupation are not exempt (unless the periods of non-occupation qualify as ‘periods of absence’; TCGA 1992, s 223(3A)).
Gains attributable to periods where the property has been let out are in principle no longer eligible for ‘lettings relief’ from 6 April 2020.
