Private residence relief is available for capital gains tax on the disposal of your own home if you satisfy both of the following two conditions for the whole time you have owned it (subject to any restrictions below applying):

1. The property has been your only home or main residence
2. You have used it as your home and nothing else

This relief may also be available if you sell part of the garden without selling your home at the same time.

If you do not satisfy both the above conditions then you will need to work out the period of ownership for the purposes of calculating the relief. This commences on the later of the date of purchase or 31 March 1982, and ends on the date of disposal. As long as the property has been your only or main home at some point during your period of ownership, the last three years (36 months) always qualify for relief even if you did not live there in that period. From 6 April 2014 this has been reduced to 18 months for the final period of ownership - . Other periods of absence from the home may qualify for full relief, if for example you have been working away from home in certain circumstances or were unable to take up residence within the first 12 months of ownership.

There are restrictions to the relief if:

1. The garden or grounds, including the site of the house, are larger than 5,000 square metres
2. Part of the home has been exclusively used for business purposes
3. You have let out all or part of your home – but you may qualify for letting relief
4. The main reason you bought it was to make a profit from a quick sale

The maximum amount of letting relief due is the lower of:

1. £40,000
2. the amount of private residence relief due
3. the amount of the gain arising by reason of the letting

If you have two or more homes, a nomination can be made to HMRC advising which property is to be treated as the main home as you are only entitled to private residence relief on one home. Nominations must be made within two years of the date from which you change the number of properties you live in. Each time you change the number of properties you live in a new nomination should be made. If a nomination is not made HMRC will decide which property to treat as your main home based on the facts.

The above is a brief summary of relief. Further information can be obtained from HMRC website or if you require further help please contact us