Readers’ forum: Does my client need to report a property sale with no gain?

One of my clients has approached me about his mother’s tax affairs. She and her husband purchased their private residence 35 years ago and his mother continued to live in the house after the death of her husband ten years ago. She had to go into a nursing home about two-and-a-half years ago. There was some hope that she might be able to return to her home to live with a care package but this proved impossible and she will never return to live in her house.

The property is now up for sale but it is proving difficult to sell and my client is worried that the three-year limit may be reached before the property is sold. Given the length of ownership the proportion of the gain which would be taxable would be very small and it is unlikely that any capital gains tax would become payable because of...