ACCA Advanced Taxation (ATX) Practice Exam

Is it true that the last nine months of ownership of a property is always exempt from Capital Gains Tax (CGT) and treated as 100% occupied?

1. True

2. False

3. Only if the property was rented

4. Depends on the type of property

The correct answer is: True

The correct answer is that the last nine months of ownership of a property is treated as exempt from Capital Gains Tax (CGT) under certain conditions. This provision, often referred to as the "final period exemption," applies primarily when the property has been the owner's principal residence at some point during their ownership. The final period exemption is designed to accommodate individuals who may not be living in the property during the final months of ownership yet will not be penalized for capital gains accrued during this time. This means that even if the property is not actively occupied as a primary residence for the last nine months, that period is still treated as fully exempt from CGT, assuming the property was genuinely the seller's main home prior to this duration. While this is a general rule, it is important to note that other specific conditions can apply, such as whether the property has always been used as a primary residence or if it has been rented out during ownership, which could affect the applicability of the exemption. However, the nine-month rule stands as a blanket provision for the period immediately preceding the sale, provided the other criteria regarding occupation are met, thus making the assertion largely valid in this context.