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Tax implications on selling rented property

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Tax implications on selling rented propertyWhat are the tax implications of selling a previously rented flat to a close relative?

In 1974 my wife and I purchased a dual occupied terraced house together with my brother in law. The house was occupied by a relative downstairs (sitting tenant) from whom we collected no rent and a lodger upstairs who paid rent to the sitting tenant.

In 1978 we obtained full ownership of the property which was still occupied by the sitting tenant and her lodger and received no rental income.

In 1991 the sitting tenant died, downstairs was renovated and rented, the lodger remained upstairs and we collected his rent.

Currently after the renovation into two flats and renting for many years, we would now like to sell upstairs to a relative but are unsure of all the implications.

Thanks

Alan Self

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