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
Claiming Principal Private Residence relief if you convert a house into flats Claiming Principal Private Residence relief if you convert a house into flats
18/04/2016
Anyone converting a house into flats should be concerned with any capital gain on a future disposal of the flats. If you have previously occupied the house or are planning to occupy the flats claiming principal private residence relief should be a key consideration. This article looks at this in detail keep reading

CGT and PPR relief if electing a new main residence - USERNAME: rodderstax - 14/03/2016
Tax Question: This question was asked on 4 th march but seems to have been lost in the ether?! Mr and Mrs A have a main residence, a 5 bedroom house on 1.5 acres near the coast. They also own two buy to let properties in Kent. Property (x) and property (y) . Mr A is 70 and Mrs A 65 and they let to gain an income and are not property traders. Buy to let property facts: Property( x) Property (x) is a flat currently on long term lets and has been owned for several years. Property (y) Property (y) is an old council house which has been completely brought up to good standard by Mr and Mrs A, with decorations and a new kitchen. This property has been let for 7 months out of the ownership period which commenced in march 2015. This property is now empty. Mr and Mrs A have moved in temporally to (y) to do some gardening and to be near grandchildren. They wish to decide the pros and cons of whether to elect that this house to be their main residence for a while. During this time they intend to apply for planning permission to rebuild the house and then will re let property again for a few years. Tax Question If Mr and mrs A were to decide to inform taxes that they have decided to treat this property (y) as their main residence, then what would be the tax issues if after say 4 years and a re-build they decided to sell? See questions/issues below: 1. How long is the 'minimum' time that they would have to use this house as their main residence to gain the PPR/ CGT exceptions available? Would 6 months be sufficient? They would then rent property again. 2.Please confirm what the CGTax allowances would be if sold after 4 years. For example the 1.5 year tax free portion of ownership, the half year ownership, the 40,000 letting allowance and any others? Sample tax calculation?- Property owned say for 4 years and sold at a CGT profit of 100,000 pound. Tax would be on 100,000 less exception of 1.5yrs ownership .5 years = 2/4* 100,000 = 50,000 so 100,000-50,000= gain 50,000 less renting allowance 40,000 =10,000 taxable amount at 18%. Is this correct ?? 3. How would the election for (y) effect the future tax on the sale of Mr and Mrs A's current main residence? keep reading

CGT and SDLT on transfer of property to wife - USERNAME: Will80 - 10/03/2016
Tax Question: Hi, I have just moved into a new home (house B) and I've occupied my previous home (house A) as main residence for 5 years. I am an higher tax payer, but my partner is not (we are not married). I am thinking to make a donation of house A to my partner. It will become her main residence and she would potentially be able to live in there or rent it out. Questions: - is there any stamp duty charge involvement? - I assume there would be a capital gain tax charge involvement for the donation of home A, but I'd be exempt for main residence relief? - I guess the transfer will occur at market value. How can it be established? many thanks keep reading

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

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

Claiming Principal Private Residence relief if you convert a house into flats Claiming Principal Private Residence relief if you convert a house into flats
18/04/2016
Anyone converting a house into flats should be concerned with any capital gain on a future disposal of the flats. If you have previously occupied the house or are planning to occupy the flats claiming principal private residence relief should be a key consideration. This article looks at this in detail keep reading

CGT and PPR relief if electing a new main residence - USERNAME: rodderstax - 14/03/2016
Tax Question: This question was asked on 4 th march but seems to have been lost in the ether?! Mr and Mrs A have a main residence, a 5 bedroom house on 1.5 acres near the coast. They also own two buy to let properties in Kent. Property (x) and property (y) . Mr A is 70 and Mrs A 65 and they let to gain an income and are not property traders. Buy to let property facts: Property( x) Property (x) is a flat currently on long term lets and has been owned for several years. Property (y) Property (y) is an old council house which has been completely brought up to good standard by Mr and Mrs A, with decorations and a new kitchen. This property has been let for 7 months out of the ownership period which commenced in march 2015. This property is now empty. Mr and Mrs A have moved in temporally to (y) to do some gardening and to be near grandchildren. They wish to decide the pros and cons of whether to elect that this house to be their main residence for a while. During this time they intend to apply for planning permission to rebuild the house and then will re let property again for a few years. Tax Question If Mr and mrs A were to decide to inform taxes that they have decided to treat this property (y) as their main residence, then what would be the tax issues if after say 4 years and a re-build they decided to sell? See questions/issues below: 1. How long is the 'minimum' time that they would have to use this house as their main residence to gain the PPR/ CGT exceptions available? Would 6 months be sufficient? They would then rent property again. 2.Please confirm what the CGTax allowances would be if sold after 4 years. For example the 1.5 year tax free portion of ownership, the half year ownership, the 40,000 letting allowance and any others? Sample tax calculation?- Property owned say for 4 years and sold at a CGT profit of 100,000 pound. Tax would be on 100,000 less exception of 1.5yrs ownership .5 years = 2/4* 100,000 = 50,000 so 100,000-50,000= gain 50,000 less renting allowance 40,000 =10,000 taxable amount at 18%. Is this correct ?? 3. How would the election for (y) effect the future tax on the sale of Mr and Mrs A's current main residence? keep reading

CGT and SDLT on transfer of property to wife - USERNAME: Will80 - 10/03/2016
Tax Question: Hi, I have just moved into a new home (house B) and I've occupied my previous home (house A) as main residence for 5 years. I am an higher tax payer, but my partner is not (we are not married). I am thinking to make a donation of house A to my partner. It will become her main residence and she would potentially be able to live in there or rent it out. Questions: - is there any stamp duty charge involvement? - I assume there would be a capital gain tax charge involvement for the donation of home A, but I'd be exempt for main residence relief? - I guess the transfer will occur at market value. How can it be established? many thanks keep reading

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

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