Private residence relief applies if you have lived in your house and it has been your only residence for the period you have owned it. In this instance you will not have to pay CGT on any money you make when you sell your house.
You may not qualify for relief on the whole property if you:
- Have a garden or grounds that extend to more than 0.5 hectares.
- Have extensive outbuildings.
- Have used any part of it exclusively for business purposes.
Bought it primarily in order to make an early sale at a profit.
If you are selling your home and you own more than one property, or you have used part of the property for business purposes such as using one room as an office, taking in lodgers or letting out all or part of the property for a while, you may be liable to pay CGT.
Whether or not you still qualify for some private residence will depend on your exact circumstances.
No longer living in your property
Even if you no longer live in your property you can still qualify for the full amount of private residence relief, provided that:
- The property has been your main home from the time that you bought it.
- It has otherwise fully qualified for private residence relief.
- You sell it within eighteen months of moving out or it is no longer your main home.
If you have been working abroad you will normally be treated as though you have lived in the UK property, and so qualify for private residence relief, provided that both of the following apply to you:
- You live in the property both before and after your absence.
- You have no other home that qualifies for private residence relief.
This relief also applies when it is your husband, wife or civil partner who was working abroad. You will get private residence relief for your time abroad, even if you do not return to live in the UK house, provided that the only reason you do not come back to live in your former home is that the employer requires you to work elsewhere.
Owning more than one home
If you live in more than one property you can tell your tax office which one you want to be treated as your main home, or principle residence for CGT purposes.
You have to make a nomination within 2 years of changing the number of properties you live in, whether the change is an increase in the number of homes or a decrease.
If you don’t tell your tax office which property you want to call your main home, the question of whether a home that you sell has been your main home and eligible for private residence relief has to be decided on the facts. With this in mind it makes sense for you to decide and notify the tax office before the two years are up.
Once you have nominated a main home you can tell the tax office at any time that a different property should be the one that qualifies for private residence relief, but you cannot backdate the change more than 2 years. You have to live in a property as your home for it to qualify.
If you are married or in a civil partnership and have two or more homes, both you and your spouse or civil partner must notify your own tax offices which of your homes is your main home for private residence relief purposes, and it has to be the same one.