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Job related accommodation – tax exemption

A client wanted to find out whether her son, who was provided with free accommodation at the school where he works, would be required to pay capital gains tax on his property which he currently rented out if he came to sell it.

The general rule is that tax is payable on any gain but there is an exception for principal private residences.  However, the percentage of the ownership period when it was not his principal private residence is taxable.  The last 18 months of ownership are ignored.

As an example, ignoring the last 18 months, if a property was owned for 15 years and it was not the principal private residence of the tax payer for seven of those years then he would pay tax on half of the gain.

Luckily there is an exemption for job related accommodation.  This occurs in three cases, the first is where it is necessary for the taxpayer to live in the accommodation for the performance of their duties.  The second case is rather more lax and applies where the accommodation is provided for the better performance of the duties of the employment.  The third is that there is a threat to their security so it is necessary to live in a safe house.