CG65640 | Private residence relief: dependent relative: rent free: interest in

You may see claims to relief under s226 TCGA92 where the dependent relative has an interest in the dwelling-house together with the person who is claiming relief. For example, a mother and son are joint owners of the house in which the mother lives.

This will commonly come about for one of two reasons:

· asset splitting - where the dependent relative originally owned the whole and has transferred a part;

· financial assistance - where the dependent relative could not afford a house and has been assisted by the claimant.

Asset Splitting

Unless there is clear evidence of the transfer of a part interest in the dwelling-house in consideration for a right of continued occupation, see CG65625, relief will be due on disposal of the part interest. relief will be due on disposal of the part interest.

Financial Assistance

In cases of this type, the claimant and the dependent relative will each acquire part interests in the dwelling-house, as beneficial tenants in common, see CG70500+. Those part interests will be proportional to the respective financial contributions made towards the purchase price of the house.

For example, if the claimant has contributed £40,000 towards a dwelling-house for a dependent relative costing £60,000, then they will have a 2/3rds interest in the house in respect of which they will be entitled to relief under s226 TCGA92 when the house is sold, assuming other conditions for the relief are met.

When considering relief on part interests which have been acquired in this way, you should not enquire into whether the dependent relative could have afforded the dwelling-house without financial assistance from the claimant. The fact that the claimant has a part interest in the house as the result of their financial contribution to its purchase is sufficient to trigger the relief if the other conditions are fulfilled.