Principal Private Residence Relief

Reducing CGT with Principal Private Residence Relief

Tax planning for the family home

If you're looking to reduce your capital gains tax charge on the disposal of UK or overseas property, claiming principal private residence ('PPR') relief can significantly reduce your tax bill.

The rules applying to PPR relief aren't straightforward but we have a number of books and articles that will clearly explain when you can and can't claim this relief. A common area of confusion arises in the application of the principal private residence relief election. Many people think this applies when you own two properties and allows you to avoid choose which property will attract PPR relief.

This is not strictly the case. In order to qualify for the election a property needs to be your residence - not simply a property that you own. 'Residence' implies that there must be some degree of occupation by you. Therefore a property that was let, and never occupied by you couldn't qualify as a residence for this purpose. There are though other options that could be considered.

Interactive PPR Relief Tool
PPR Relief Calculator PPR Relief Calculator
Calculating the amount of PPR relief can be difficult. This calculator does all the work for you. Just enter details of your periods of ownership and occupation of the property and our PPR relief calculator lets you know the amount of PPR relief you will qualify for. keep reading

Interactive Private Residence Relief Tool Interactive Private Residence Relief Tool
Qualifying for Principal Private Residence ("PPR") Relief can substantially reduce capital gains tax on the disposal of property or land. This interactive tool guides you through the rules relating to PPR relief to ensure you maximise your relief. Available for Gold Members Only. keep reading


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Principal Private Residence Relief
PPR relief claim if no occupation? - USERNAME: NewName - 01/02/2016
Tax Question: A middle-aged couple decided to move to a new house to be near their son. Having bought the new house, but before actually moving in, they discovered a water leak under the concrete kitchen floor and this required extensive work which ended up taking many weeks. During this time they had a falling out with their son and decided not to move in to the new house, and they then sold it, having owned it for 6 months but without ever moving in. They made a significant gain and wish to claim Private Residence Relief under S222, do they think that, if they can convince HMRC that they had genuine reasons for their actions, they could succeed. Many thanks. keep reading

Principal Private Residence Rule - USERNAME: Anon - 01/02/2016
Tax Question: If a beneficiary inherits property that was main residence of his mother, does he qualify for PPR if he sales the property after a few months say-9 months. The beneficiary does not stay in the property he has inherited . Also do the 9 months form part of the 18 months deemed occupation. keep reading

Buying property tax efficiently whilst your children are studying Buying property tax efficiently whilst your children are studying
18/01/2016
The slump in property prices will have made many people consider whether buying property for their children to occupy whilst at university is cost effective. However, given the currently low prices, if you're looking at the long term with perhaps other family members occupying the property and also renting it out to third parties it can still be a worthwhile investment. In this article we look at structuring such a purchase tax efficiently keep reading

PPR relief and CGT on transfer to wife - USERNAME: Macca88 - 12/01/2016
Tax Question: I jointly own a property in London with a friend - 50:50 split. It was purchased Dec'03, we both lived in it until Dec'06 & we have been renting it out since then. We now plan to sell the property & I have calculated a rough CGT exposure to both of us of ~?20k. We are both considering transferring 50% o our respective shares to our wives to minimise the CGT exposure via Transfer of Equity. My questions is will the CGT calculation for our wives share of the property be the same as ours (i.e. original purchase price, same PRR calculation, lettings relief calculation)? Thanks keep reading

Main residence relief - USERNAME: Will80 - 08/01/2016
Tax Question: Main residence relief Description A couple of questions please. 1) Assuming i buy a flat for 300k, then rent it for 5 years. Then after 5 years I move in for another 5 year as a MAIN residence (total ownership 10 years). Then sell it for 600k. The profit of 300k would be tax free or 50% t free and have to pay basically cap gain tax on 150k? 2) I lived in a property for 4 years as main residence. Then I rent it out for 5 years and I move in back again for 1 more year as main residence. If I sell the property, would it be fully capital gain tax free? Or tax free for the equivalent for 5 years 18 months? Thanks keep reading

CGT on disposal of UK property after becoming non resident - USERNAME: ayshabrown66 - 04/12/2015
Tax Question: My family and i are emigrating to Australia in Feb 2016 and i wanted to find out how my tax liabilities are going to change. I wanted help working out my tax liability for a rental property and look at ways of how i can reduce it. i could sell the property before we emigrate but i would much rather keep the property for another 5 years if my CGT bill is still comparable to selling now. Please find the details of the property below. Bought 7/97 £53,000 and moved in Moved out 8/2004 = 85 months Still owned now so till feb 2016 223 months in total. Value around 230,000 I haven't use my CGT tax allowance this year and i'm the only owner. I have a large gain that i'm concerned about. My buying, selling and improvements costs are 21,376. Could you let me know what my CGT tax liability will be once i'm resident in Aus and also have kept my property for 1year to to receive the reduced CGT band in Australia. Also how my CGT liability for the UK whilst i'm resident is Aus would be worked out in this scenario. Im married and have two children and we are all moving over to Aus. I was hoping this site could help me with my tax planning as i was quoted £600 for a meeting with a tax expert in this field. That is just for the 2 hour meeting! Many Thanks keep reading

PPR relief and CGT when property occupied before 6 April 2015 and sold as a non-resident PPR relief and CGT when property occupied before 6 April 2015 and sold as a non-resident
04/12/2015
Following a request from a site member we've looked at the tax treatment of residential property sold after April 2015 as a non UK resident where the property was originally occupied before this date. keep reading

CGT on transfer to Son - USERNAME: regaziz - 09/11/2015
Tax Question: A person bought an apartment for his to live in, now he wants to transfer the ownership to his son. Is there any CGT to be paid? Can they defer the CGT until the son sells the property? Is there any relief to be claimed eg PPR because the son has been living in the apartment from day one? keep reading

Capital gains tax help

We can provide you with help on the application of the principal private residence relief rules via our online Capital gains tax help service.

Tax Articles on Principal Private Residence Relief

PPR relief claim if no occupation? - USERNAME: NewName - 01/02/2016
Tax Question: A middle-aged couple decided to move to a new house to be near their son. Having bought the new house, but before actually moving in, they discovered a water leak under the concrete kitchen floor and this required extensive work which ended up taking many weeks. During this time they had a falling out with their son and decided not to move in to the new house, and they then sold it, having owned it for 6 months but without ever moving in. They made a significant gain and wish to claim Private Residence Relief under S222, do they think that, if they can convince HMRC that they had genuine reasons for their actions, they could succeed. Many thanks. keep reading

Principal Private Residence Rule - USERNAME: Anon - 01/02/2016
Tax Question: If a beneficiary inherits property that was main residence of his mother, does he qualify for PPR if he sales the property after a few months say-9 months. The beneficiary does not stay in the property he has inherited . Also do the 9 months form part of the 18 months deemed occupation. keep reading

Buying property tax efficiently whilst your children are studying Buying property tax efficiently whilst your children are studying
18/01/2016
The slump in property prices will have made many people consider whether buying property for their children to occupy whilst at university is cost effective. However, given the currently low prices, if you're looking at the long term with perhaps other family members occupying the property and also renting it out to third parties it can still be a worthwhile investment. In this article we look at structuring such a purchase tax efficiently keep reading

PPR relief and CGT on transfer to wife - USERNAME: Macca88 - 12/01/2016
Tax Question: I jointly own a property in London with a friend - 50:50 split. It was purchased Dec'03, we both lived in it until Dec'06 & we have been renting it out since then. We now plan to sell the property & I have calculated a rough CGT exposure to both of us of ~?20k. We are both considering transferring 50% o our respective shares to our wives to minimise the CGT exposure via Transfer of Equity. My questions is will the CGT calculation for our wives share of the property be the same as ours (i.e. original purchase price, same PRR calculation, lettings relief calculation)? Thanks keep reading

Main residence relief - USERNAME: Will80 - 08/01/2016
Tax Question: Main residence relief Description A couple of questions please. 1) Assuming i buy a flat for 300k, then rent it for 5 years. Then after 5 years I move in for another 5 year as a MAIN residence (total ownership 10 years). Then sell it for 600k. The profit of 300k would be tax free or 50% t free and have to pay basically cap gain tax on 150k? 2) I lived in a property for 4 years as main residence. Then I rent it out for 5 years and I move in back again for 1 more year as main residence. If I sell the property, would it be fully capital gain tax free? Or tax free for the equivalent for 5 years 18 months? Thanks keep reading

CGT on disposal of UK property after becoming non resident - USERNAME: ayshabrown66 - 04/12/2015
Tax Question: My family and i are emigrating to Australia in Feb 2016 and i wanted to find out how my tax liabilities are going to change. I wanted help working out my tax liability for a rental property and look at ways of how i can reduce it. i could sell the property before we emigrate but i would much rather keep the property for another 5 years if my CGT bill is still comparable to selling now. Please find the details of the property below. Bought 7/97 £53,000 and moved in Moved out 8/2004 = 85 months Still owned now so till feb 2016 223 months in total. Value around 230,000 I haven't use my CGT tax allowance this year and i'm the only owner. I have a large gain that i'm concerned about. My buying, selling and improvements costs are 21,376. Could you let me know what my CGT tax liability will be once i'm resident in Aus and also have kept my property for 1year to to receive the reduced CGT band in Australia. Also how my CGT liability for the UK whilst i'm resident is Aus would be worked out in this scenario. Im married and have two children and we are all moving over to Aus. I was hoping this site could help me with my tax planning as i was quoted £600 for a meeting with a tax expert in this field. That is just for the 2 hour meeting! Many Thanks keep reading

PPR relief and CGT when property occupied before 6 April 2015 and sold as a non-resident PPR relief and CGT when property occupied before 6 April 2015 and sold as a non-resident
04/12/2015
Following a request from a site member we've looked at the tax treatment of residential property sold after April 2015 as a non UK resident where the property was originally occupied before this date. keep reading

CGT on transfer to Son - USERNAME: regaziz - 09/11/2015
Tax Question: A person bought an apartment for his to live in, now he wants to transfer the ownership to his son. Is there any CGT to be paid? Can they defer the CGT until the son sells the property? Is there any relief to be claimed eg PPR because the son has been living in the apartment from day one? keep reading

Calculation of capital gain - USERNAME: Rocky - 15/10/2015
Tax Question: Hi, I have jointly (My brother and myself)bought a house in 1986. From 1986 to 1989 my brother was living there . From 1989 to now it was rental . My brother transferred his part or to me 3 years ago. Question: - how will the capital gain be calculated? Thanks keep reading

CGT on property if overseas - USERNAME: Columbus - 28/05/2015
Tax Question: Sir, I am considering renting out my apartment in London whilst spending some time overseas. Should I decide to sell the apartment in a few years time will I have to pay capital gains tax on the likely increase in value of my apartment during my stay overseas? Thank you, Columbus keep reading

How to claim PPR relief on property occupied by a relative How to claim PPR relief on property occupied by a relative
22/05/2015
Where you have a property owned by you but occupied by an elderly relative it used to be possible to claim dependent relative relief. This is now long gone, but what other options are there for structuring an occupation of your property by an elderly relative so that you can reduce PPR on a future disposal? We look at one opportunity in this Practitioner Zone article keep reading

PPR relief if using property for business/working from home - USERNAME: Massimiliano2 - 13/05/2015
Tax Question: Sirs - re PPR [private residence CGT relief on sale of private residence] and registering a company - for starting contract work - at the private home's address, I have read that this registration does not affect the PPR, provided no parts of the private residence are used exclusively for business purposes. Could you please clarify : 1. what would make a part of the home clearly identifiable by the tax inspector as being for business purposes only? 2. On the other hand, how could one ensure that, say, the private studio in the house with its PC, desk, books etc is not suddenly seen as designated for business only but retains its originally intended nature as for private use? How about any of the remaining rooms in the house? 3. Does it make any difference in terms of the PPR whether the contract work is registered technically as sole trader, or Ltd Company or under an Umbrella Company? 4. Contract work is normally carried out in full at the client's premises but would some part-time work from home have any impact? Many thanks and best regards, M. keep reading

Valuing property to maximise PPR relief - USERNAME: Will80 - 27/04/2015
Tax Question: Dear Sir, I have purchased a new home which will be my permanent resident address and I am thinking whether or not convenient to rent out or sell my old private residence, considering that current market prices embed a significant potential capital gain. If the property is sold within 18 months, thanks to principal private residence relief, I would not in fact pay any capital gain tax. If I rent it out, with the current rules, I will have to potentially pay capital gain tax at a future date. Assuming that I expect no more significant capital appreciation for that home, it would be convenient to sell it now and realise the capital gain. In fact, I assume that the 40,000 relief available if I start the rental business won't make up for the additional taxes to be paid on a future disposal. My question is whether it is possible to get independent valuations for my previous main private residence from multiple agents and crystallize the value of the home as of today (based on multiple independent valuations), then start renting out the property, so that on a future disposal I would only be liable of potential capital gain taxes on the difference between the sale value and the value of today (today being the date of the independent valuations and the day in which the current home won't be any more my principal private residence). Would HMRC accept such valuation? keep reading

Beneficial ownership, receiving a share of the proceeds and reducing capital gains tax Beneficial ownership, receiving a share of the proceeds and reducing capital gains tax
09/03/2015
When looking at the capital gains tax position on the disposal of property, the beneficial interest can have a significant impact. CGT follows primarily the beneficial, as opposed to the legal interest. So the legal title holder is not necessarily the one subject to CGT on the disposal. Good examples of this are bare trustees and nominees. This article looks at ownership of property and tax planning from the splitting of beneficial and legal interests, particularly where there is to be a share of the proceeds of sale keep reading

CGT and separation/divorce CGT and separation/divorce
06/03/2015
Ensuring that transactions are correctly structured where there is a planned separation or divorce can significantly reduce the amount of CGT. In this article we look at how separation and divorce affects CGT and how to ensure transfers are tax efficient keep reading

Follow on questions on PPR relief - USERNAME: massky - 25/02/2015
Tax Question: Thank for replaying to my first post, I have additional questions related to ask you regarding my first post. Q: 1a] I am allowed to rent my PPR in UK while being absent working overseas and would that still counts as my PPR in UK ? A: 1a] The property needs to be occupied as a residence for it to qualify for the deemed periods of occupation. If it was let strictly speaking it wouldn't be available for occupation as a residence. Therefore my initial view would be that the deemed period of occupation in S223[3][b] wouldn't apply. Note however that from April 2015 in order for a UK property to be your main residence you would need to either be UK resident or present in the UK for at least 90 nights. Q: 1b] UK property were I reside, it's my residence since I acquire it, and this is only property I have, it was never let before. It will be let ONLY if I take up employment overseas. When I return home to UK from working overseas, it will be my residence again. Would S223 [3] [b] apply to this ? A: 1b? -------------- Q: 2a] My wife and child will remain in UK but re-locate to another part of city close to her family and rent a flat there. Would this jeopadrise my PPR even I am solo owner of my PPR ? A: 2a] You and your wife would both need to have the same PPR relief if you are not separated. Q: 2b] Separating from wife, is it suffice ? Do you need to get divorced lawfully? A: 2b ? -------------- Q: 3a] At employment overseas, does employer have to pay for my accommodation to not jeopardise my PPR in UK ? I am allowed to rent a flat, or share a flat while working overseas ? A: 3a] If you acquire any kind of tenancy or interest in a property whilst living there, it would be classed as a residence and the deemed period of occupation wouldn't apply to the UK property. Therefore you'd need to occupy under a licence. Q: 3b] Occupying under a licence, are you saying that only employer who you work for overseas have to pay for your accommodation, or tenancy agreement have to be in employers name ? A: 3b? keep reading

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