When a property is your main residence

Actually identifying when a property is a main residence can be tricky. It can be very attractive in tax terms though. Take the case where you own a property that is let. The increase in property values over the past couple of years could mean you're looking at a substantial capital gains, with a large resulting tax charge. If you can get this property classed as your main residence in many case this can eliminate the tax charge particularly where you've only owned it for 3-5 years. Principal private residence relief can effectively exempt around three years worth of any capital gain arising, and in this case lettings relief can also be claimed. This exempts the gain even more by up to £40,000 (or up to £80,000 for a couple) which in many cases can eliminate the capital gain completely. Therefore actually knowing when a property is a main residence can be important in reducing tax charges on disposal. Members can view this article on how to make a property your main residence which also includes a checklist of factors to consider.