3. Capital Gains Tax on property

You don’t usually have to pay Capital Gains Tax if you make a gain from the sale of your only (or main) home. However, you may have to pay Capital Gains Tax if you make a gain on other property or land.

Private Residence Relief

You won’t have to pay Capital Gains Tax when you sell your own home if both of the following apply:

  • it’s been your only or main home for the whole time you’ve owned it
  • you’ve only used it as your home (for example, you haven’t let it out or used it as a business premises)

You get Private Residence Relief automatically. You don’t have to claim it.

You live in more than one property

You can ‘nominate’ one property as your main home if you live in (and own) more than one.

Write to HM Revenue and Customs (HMRC) to tell them which property you want to nominate.

You must make your nomination within 2 years of starting to live in more than 1 home. You must do this whenever the number of homes you live in changes.

Time away from home

You can claim full ‘Private Residence Relief’ if you’ve spent time away from home:

  • for up to 1 year when you first bought it - for example, because it needed renovation or you still had to sell your previous home
  • for up to 18 months before you sold it - as long as it was your only or main home for some of the time you’ve owned it
  • if you had to work away from home for up to 4 years - but you can’t claim the Private Residence Relief on another home you lived in during that period

You must have actually lived in the property as your home.

Restrictions

You might not get the full amount of relief if:

  • the garden and grounds (including the site of the house) are larger than 5,000 square metres
  • you’ve used part of your home only for business (an office you also use as a guest bedroom doesn’t count)
  • you’ve let out all or part of your home (but you may get Letting Relief instead)
  • the main reason you bought the property was to make a profit from selling it again

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