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Capital Gains Manual

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HM Revenue & Customs
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Private residence relief: letting: whole residence let for period

Example 1 - Property occupied as residence, let and left vacant before pre 6/4/14 disposal
Example 2 - Property occupied as residence, let and left vacant before disposal on or after 6/4/14
Example 3 - Property occupied as residence and then let before disposal pre 6/4/14 disposal
Example 4 - Property occupied as residence and then let before disposal on or after 6/4/14

Example 1 - Property occupied as residence, let and left vacant before pre 6/4/14 disposal

A dwelling house was purchased on 1 January 2001 and sold on 31 December 2013. It was occupied as its owner’s only or main residence from 1 January 2001 to 31 December 2006. It was let as residential accommodation from 1 January 2007 to 31 December 2009 and was then empty until it was sold at a gain of £150,000.

Computation

Net gain of £150,000 minus Private Residence Relief of £103,846 equals £46,154.

Note: Private Residence Relief is calculated as follows: £150,000 x (6 years + Final 3 years) ÷ 13 years.
Note: See CG64985 for details about ‘Final 3 years’.

£46,154 minus relief under TCGA92/S223(4) of £34,615 equals a chargeable gain of £11,539.

Note: Relief under TCGA92/S223(4) is limited to the lowest of:

  • The amount of Private Residence Relief [£103,846 in this example]
  • The amount specified in TCGA92/S223(4)(b) [£40,000]
  • The gain arising by reason of letting [£34,615 in this example by using the following calculation: (£150,000 x 3 years) ÷ 13 years].

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Example 2 - Property occupied as residence, let and left vacant before disposal on or after 6/4/14

A dwelling house was purchased on 1 January 2002 and sold on 31 December 2014. It was occupied as its owner’s only or main residence from 1 January 2002 to 31 December 2007. It was let as residential accommodation from 1 January 2008 to 31 December 2010 and was then empty until it was sold at a gain of £150,000.

Computation

Net gain of £150,000 minus Private Residence Relief of £86,539 equals £63,461.

Note: Private Residence Relief is calculated as follows: £150,000 x (6 years + Final 1½ years) ÷ 13 years.
Note: See CG64985 for details about ‘Final 1½ years’.

£63,461 minus relief under TCGA92/S223(4) of £34,615 equals ‘Chargeable gain’ of £28,846.

Note: Relief under TCGA92/S223(4) is limited to the lowest of:

  • The amount of Private Residence Relief [£86,539 in this example]
  • The amount specified in TCGA92/S223(4)(b) [£40,000]
  • The gain arising by reason of letting [£34,615 in this example by using the following calculation: (£150,000 x 3 years) ÷ 13 years].

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Example 3 - Property occupied as residence and then let before disposal pre 6/4/14 disposal

A dwelling house was purchased on 1 January 2001 and sold on 31 December 2013. It was occupied as its owner’s only or main residence from 1 January 2001 to 31 December 2006. It was let as residential accommodation from 1 January 2007 until it was sold at a gain of £150,000.

Computation

Net gain of £150,000 minus Private Residence Relief of £103,846 equals £46,154.

Note: Private Residence Relief is calculated as follows: £150,000 x (6 years + Final 3 years) ÷ 13 years.
Note: See CG64985 for details about ‘Final 3 years’.

£46,154 minus relief under TCGA92/S223(4) of £40,000 equals Chargeable gain of £6,154.

Note: Relief under TCGA92/S223(4) is limited to the lowest of:

  • The amount of Private Residence Relief [£103,846 in this example]
  • The amount specified in TCGA92/S223(4)(b) [£40,000]
  • The gain arising by reason of letting [£46.154 in this example by using the following calculation: (£150,000 x 4 years) ÷ 13 years].
    Note: Although the property was let for 7 years, the final 3 years is already relieved by the final period of exemption. Lettings relief is only available against the part of the gain which would be chargeable by reason of the letting. No chargeable gain arises in that final 3 year (36 month) period - TCGA92/S223(2).

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Example 4 - Property occupied as residence and then let before disposal on or after 6/4/14

A dwelling house was purchased on 1 January 2002 and sold on 31 December 2014. It was occupied as its owner’s only or main residence from 1 January 2002 to 31 December 2007. It was let as residential accommodation from 1 January 2008 until it was sold at a gain of £150,000.

Computation

Net gain of £150,000 minus Private Residence Relief of £86,539 equals £63,461.

Note: Private Residence Relief is calculated as follows: £150,000 x (6 years + Final 1½ years) ÷ 13 years.
Note: See CG64985 for details about ‘Final 1½ years’.

£63,461 minus relief under TCGA92/S223(4) of £40,000 equals Chargeable gain of £23,461.

Note: Relief under TCGA92/S223(4) is limited to the lowest of:

  • The amount of Private Residence Relief [£86,539 in this example]
  • The amount specified in TCGA92/S223(4)(b) [£40,000]
  • The gain arising by reason of letting [£63,461 in this example by using the following calculation: (£150,000 x 5½ years) ÷ 13 years].
    Note: Although the property was let for 7 years, the final 1½ years is already relieved by the final period of exemption. Lettings relief is only available against the part of the gain which would be chargeable by reason of the letting. No chargeable gain arises in that final 1½ year (18 months) period - TCGA92/S223(2).