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HMRC internal manual

Capital Gains Manual

Private residence relief: ownership period: qualifying for relief

TCGA92/S222 (7)

If a dwelling house or part of a dwelling house has been used as its owner’s only or main residence at any time in the period of ownership any gain on disposal of the dwelling house or that part of the dwelling house will qualify in principle for relief.

Under TCGA92/S222 (7) where different interests are held at different times the period of ownership begins at the date of the first acquisition on which expenditure is incurred which would have been deductible in computing any gain. For example, a person first occupies her residence paying rent under a tenancy, but incurring no capital expenditure. She then later buys the freehold. Her period of ownership begins with the acquisition of the freehold. An example of this is given below.

An individual occupied residence A as his only residence from 1 March 2003 on a weekly tenancy. He incurred no capital expenditure. On 1 December 2006 he acquired the freehold in the property for £100,000. On 1 June 2008 he acquired a second property, B, and began to use both properties as residences. He nominated B as his only or main residence within the time allowed by TCGA92/S222 (5), see CG64495. On 1 January 2013 he sold A for £250,000.

His gain on the disposal of A is computed as follows

  Disposal proceeds 250,000
Less Cost 100,000
  Net gain 150,000


  • period of ownership 1.12.06 - 1.1.13 = 73 months
  • period of only or main residence 1.12.06 - 1.6.08 = 18 months
  • final period allowed by Section 223(2) = 36 months *

Relief: 18 + 36 x £150,000 = £110,959


The chargeable gain is £39,041 before the annual exempt amount.

  • If residence A had been disposed of on or after 6 April 2014 the final period exemption would be limited to 18 months see CG64985.