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One of my clients has purchased together with his wife a property which has been the family home. It cost £265 000 in 1996 and is now worth in the region of £1.4m.
They are in the process of converting the garage into a one-bedroom apartment which will have a separate entrance and an outside space at the back which will be decked out. The estimated conversion cost is £60 000. The plan is to rent out this apartment for a few years with rental income estimated at £13 000 to 14 000 a year.
My client expects to sell the apartment in about five years’ time (retaining the main house). Only or main residence relief will be restricted but will some relief be due for the period before the garage conversion?
Just to complicate matters my client and his wife were out of the...
