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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

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.

The computation is

Net gain       £150,000
         
Private Residence Relief   6 years + final 3 years *    
            13 years   £103,846      
          £46,154
  Relief under TCGA92/S222(4) limited to the lowest of        
    Private Residence Relief      
or   £103,846  
    TCGA92/S223(4)(b)  
or   £40,000  
    Gain arising by reason of letting 3 years x £150,000
         13 years £34,615        
  Applicable limit       £34,615
  Chargeable gain       £11,539
  • see CG64985

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.

The computation is

Net gain       £150,000
         
Private Residence Relief   6 years + final 1 1/2 years *    
                13 years      £86,539      
          £63,461
  Relief under TCGA92/S222(4) limited to the lowest of        
    Private Residence Relief      
or   £86,539  
    TCGA92/S223(4)(b)  
or   £40,000  
    Gain arising by reason of letting 3 years x £150,000
         13 years £34,615        
  Applicable limit       £34,615
  Chargeable gain       £28,846
  • see CG64985

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.

The computation is

Net gain       £150,000
         
Private Residence Relief   6 years + final 3 years *    
            13 years   £103,846      
          £46,154
  Relief under TCGA92/S222(4) limited to the lowest of        
    Private Residence Relief      
or   £103,846  
    TCGA92/S223(4)(b)  
or   £40,000  
    Gain arising by reason of letting 4 years** x £150,000
            13 years £46,154        
  Applicable limit       £40,000
  Chargeable gain          £6,154
  • see CG64985

**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 36 month period TCGA92/S223(2).

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.

The computation is

Net gain       £150,000
         
Private Residence Relief   6 years + final 1 1/2 years *    
               13 years      £86,539      
          £63,461
  Relief under TCGA92/S222(4) limited to the lowest of        
    Private Residence Relief      
or   £86,539  
    TCGA92/S223(4)(b)  
or   £40,000  
    Gain arising by reason of letting 5 1/2 years** x £150,000
              13 years £63,461        
  Applicable limit       £40,000
  Chargeable gain       £23,461
  • see CG64985

**Although the property was let for 7 years, the final 1 ½ 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 1 ½ years (18 months) TCGA92/S223(2).