When you sell your home the gain will be covered by PPR to the extent you have resided in the property. Historically, if you have resided in the property at any point you were always deemed to occupy the property for the last 3 years. The Autumn Statement contained a surprise announcement that the “last 3 years” exemption will be reduced to 18 months for disposals on or after 6 April 2014.
Exception Disabled persons/ long term care home resident – Retention of the 3 year rule
The last “3 years rule” is however retained for disposals by disabled persons or persons in care homes provided that one of two conditions is met at the time of disposal:
- The individual is a disabled person or a long term resident in a care home and does not have any other relevant right in relation to a private residence.
- The individual’s spouse or civil partner is a disabled person or a long term resident in a care home, and neither the individual nor the individual’s spouse or partner has any other relevant right in relation to a private residence.
NB: The timing of disposals will be key where an individual is relying on the care home condition. If they move out of their home to live with relatives, the 18 month rule will apply if the property is sold whilst residing with relatives.
However, if after 30 months of living with relatives, they went into a care home and then sold their old home they would then be entitled to the 3 year rule.
The timing of disposal is therefore critical. It is tested at the time of disposal. If the intention is to move from residing with relatives and into a care home after more than 18 months, the property should either be disposed of within 18 months of residing with relatives or once they have moved to the care home if they want the benefit of the 36 month rule.
If you have any queries or concerns regarding the above please give Sue Stephens a call.