ACCA Taxation (F6) Practice Exam

What constitutes deemed occupation for capital gains tax purposes?

1. Any time the property was rented out

2. Last 9 months of ownership and up to 3 years for any reason

3. Only the time the owner occupied the property as their main residence

4. Any legal documentation showing property ownership

The correct answer is: Last 9 months of ownership and up to 3 years for any reason

For capital gains tax purposes, deemed occupation refers to specific periods during which an individual is treated as if they were residing in a property, even if they were not physically occupying it. This is crucial for determining any relief or exemption available on the capital gain when the property is sold. The correct response highlights that the last nine months of ownership can be treated as deemed occupation, irrespective of the actual usage or renting of the property. Additionally, for certain individuals (like those who might have to move for work or due to other circumstances), a period of up to three years may also be deemed as occupation, and this is still applicable even if they are not residing there during that time. This provision ensures that sellers who have previously used the property as their main residence can benefit from tax relief, thereby reducing their tax liability upon the sale. Other options do not accurately capture the full scope of deemed occupation as understood in capital gains tax legislation. Simply being rented out does not qualify as deemed occupation for tax purposes. Permanent residence is also a limited view since the tax law accounts for a broader scope of circumstances surrounding ownership. Legal documentation alone cannot establish deemed occupation; instead, it is related to the timing and use of the property as defined by tax regulations.