CG64325 | Private residence relief: the entity of the dwelling-house: caravans

Caravans

A mobile caravan is a chattel as it is a tangible moveable asset. If it is a wasting asset (see CG76700+), and no capital allowances were available on its cost, no chargeable gain can arise on its disposal. Any gain is exempted by s45(1) TCGA92 (see CG11700).

Where a caravan has become so affixed to the land as to become part of it, it will have ceased to be a chattel and so any gain will not be exempt. However, in these circumstances it may be that the caravan would be regarded as a dwelling-house and as such private residence relief may be available.

A caravan which is connected with water, electricity, telephone and other essential services and has become permanently located on a site, even though it may still be technically mobile, may be regarded as a dwelling-house. However, this is a question of fact. Assistance can be obtained in relation to this issue in the contrasting decisions of Makins v Elson (51TC437) and Moore v Thompson (61TC15).

Boats

The analysis which applies to caravans equally applies to houseboats. Houseboats will generally be tangible moveable wasting assets and so exempt from Capital Gains Tax under s45(1) TCGA92.

A houseboat which is permanently located on a site and connected to all mains services may be regarded as a dwelling-house. If the houseboat has been used as an immobile residence for a period of 6 months or more and has had all of its engines removed it should be regarded as a dwelling-house. Other cases should be considered on their specific facts.

Occasionally yachts, barges or other boats are used as the residence of their owner. In some cases, the useful life of the boat is such that it cannot be regarded as a wasting asset and so a chargeable gain may arise on its disposal. Where this is the case the boat should not be regarded as a dwelling-house except in the circumstances explained above which apply to houseboats.