Private Residence Relief
Principal Private Residence relief
When you sell your home it is normally exempt from Capital Gains Tax (CGT). It’s known as Principal Private Residence relief
Each unmarried person, and each legally married couple, are entitled to the relief on their only or main residence
For this to apply, the property must genuinely be your private residence
Take great care. You’re just a quick Google away from plenty of schemes and scams which could land you in very hot water. Seems there’s a whole range of advisors for whom ‘too far’ is part of the brand
Top-tip: leave well alone and, remember, the tax authority has Google too!
It’s not set in tablets of stone as to how long you must live in the property to establish it as your private residence. It is the ‘quality of occupation’ that matters, not the time
There are some widely accepted principles. You should:
- Move into the property for a substantial period
- Notify the Local Authority (council tax and electoral roll), banks, utilities, employer(s), HMRC, etc
- Furnish the property in a way that makes it obvious you live there
- Register at the correct local medical centre
- What really matters is that the property genuinely becomes your permanent home, not temporary, and with no obvious plans of moving on
- There is no definition of ‘substantial period’. Experience suggests that means a minimum of one year and, ideally, two or more
There have been exceptions and shorter periods have sufficed but erring on the side of caution will likely stand you in good stead..
It may be possible to simply elect for the property to be treated as your main residence but it must be genuine and it’s good practice to apply as many of the above principles as possible
Remember; you may be called upon to prove it – so keep records
Inherited Property
If you’ve suffered loss of a loved one there’s no easy way beyond this point, but it’s not all doom and gloom, and here’s why:
Generally, the cost of inherited property is based on the value of the property at the time of the previous owner’s death
Broadly, the tax treatment is as though the property was purchased on that date
If a property is sold by the deceased’s estate, the tax treatment is as though it was acquired at full market value on the date of the deceased’s demise
Transfers of property from the deceased’s estate are exempt from Capital Gains Tax
Testimonials
- “Having been a client for around 20 years, they have assisted us many times, always putting our interests first. They have always acted with honesty and integrity. With a wide network of professionals an answer is always found to whatever problem has been presented to them.”
- Richard Mancey
- Managing Director, Paultons Park Ltd
- “Acted for me since 1998. Great ability to look at the bigger picture and always with my interests uppermost. Well connected and typically brings other professionals in to the advice process”
- Patrick Trant
- Chairman, Trant Engineering Ltd
- “I have been a client for more than 10 years throughout which time I have found them to be professional and competent, operating as part of a team with a wide knowledge of tax and related planning. They put my interests first and are particularly good at explaining technical subject matter in a straightforward way”
- Anthony Mowatt
- Chairman, Keystone Legal Ltd a Sunday Times Top 100 Track company
- “In almost twenty years of working for us they have acted with honesty and integrity as one of our trusted advisers. We are always treated as important and nothing is too much trouble”
- John Reilly
- Managing Director, John Reilly (Civil Engineering) Ltd
- “Worked for me for more than 15 years on a variety of projects, large and small. They are particularly adept at using applied knowledge and expertise to work with their network of professionals to deliver my goals. I have found them very easy to work with and happily recommend them to others”
- John Clark
- Managing Director, T Clark & Son Ltd
- “Having been a client for around 20 years, they have assisted us many times, always putting our interests first. They have always acted with honesty and integrity. With a wide network of professionals an answer is always found to whatever problem has been presented to them.”
- Richard Mancey
- Managing Director, Paultons Park Ltd
- “Acted for me since 1998. Great ability to look at the bigger picture and always with my interests uppermost. Well connected and typically brings other professionals in to the advice process”
- Patrick Trant
- Chairman, Trant Engineering Ltd
- “I have been a client for more than 10 years throughout which time I have found them to be professional and competent, operating as part of a team with a wide knowledge of tax and related planning. They put my interests first and are particularly good at explaining technical subject matter in a straightforward way”
- Anthony Mowatt
- Chairman, Keystone Legal Ltd a Sunday Times Top 100 Track company
- “In almost twenty years of working for us they have acted with honesty and integrity as one of our trusted advisers. We are always treated as important and nothing is too much trouble”
- John Reilly
- Managing Director, John Reilly (Civil Engineering) Ltd
- “Worked for me for more than 15 years on a variety of projects, large and small. They are particularly adept at using applied knowledge and expertise to work with their network of professionals to deliver my goals. I have found them very easy to work with and happily recommend them to others”
- John Clark
- Managing Director, T Clark & Son Ltd
