Selling your main residence? Private Residence Relief can exempt you from Capital Gains Tax. If you meet certain conditions, there may be nothing to pay.
In most cases, Capital Gains Tax (CGT) does not apply to the disposal of a property that has been used as your main family residence. This exemption known as Private Residence Relief can eliminate CGT entirely if certain conditions are met. However, the relief does not apply to investment properties that have never been used as your home.
To qualify for full Private Residence Relief, the following conditions must generally be satisfied:
- The property has been your only or main residence throughout the entire period of ownership.
- No part of the property has been let out, with the exception of taking in a lodger.
- No area of the home has been used exclusively for business purposes. (Using a room occasionally or temporarily as a home office does not count as exclusive business use.)
- The garden and grounds, including any outbuildings, do not exceed 5,000 square metres (just over an acre).
- The property was not acquired with the sole intention of making a profit.
If a property has been your home at any point, the final 9 months of ownership are automatically treated as a period of qualifying residence for CGT purposes, even if you were not living there when the property was sold. In some limited circumstances, this final exempt period can be extended to 36 months (for example, where the homeowner moves into care or is unable to sell immediately).
Additional reliefs may also be available if the homeowner had to live or work away from home for extended periods.
It's also important to note that married couples and civil partners can only designate one property as their main home at any given time for tax purposes.