TaxPersonal TaxCare home residents could be caught in CGT trap

Care home residents could be caught in CGT trap

Those who hang on to their old houses, classified as a secondary residence, are in line to pay tax if they sell a property which has increased in value after three years

Elderly people living in care homes may be caught in the capital gains tax
trap, advisers have warned.

The coalition government is gearing up to raise CGT from 18% to possibly 40%
for non-business assets such as second homes.

Those being looked after but still hanging on to their old houses would have
to pay capital gains tax, because the care home is classified as their primary
residence.

If they sell their house, treated as their secondary residence after three
years, they will be liable for CGT if the property has gone up in value.

Stephen Herring, senior tax partner at accountancy firm BDO, told the
Daily
Telegraph:
“There is no special relief for people who move into care homes.”

Further reading:

Coalition
will see CGT hike on the cards

CGT
reform comes under Redwood attack

Chris
Evans escapes CGT on car sale

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