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HMRC internal manual

Capital Gains Manual

Private residence relief: the entity of the dwelling house: dwelling house is the whole building

In most cases the whole of a building in which a person has a residence will be a dwelling house. This will include

  • Premises in which the owner resides although he or she also carries on a business there (for example rooms above a shop)
  • Premises which are partly let as residential accommodation
  • Small hotels and guest houses where the proprietor lives on the premises.

In such cases, although the whole of the building may be the dwelling house, it is only partially used as a residence. Private residence relief is only available in respect of a gain accruing on the disposal of, or of an interest in, a dwelling house which has been occupied as the only or main residence. Therefore private residence relief will be restricted to only relieve the part of the gain accruing which is attributable to the residential part of the dwelling house. See instructions at CG64650+.