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HMRC internal manual

Capital Gains Manual

Private residence relief: ownership period: relief denied by rules in FA 2004: example

Amar acquired his house from the trustees of a family trust on 23 January 2004. A claim to gift hold-over relief under section 260 was made on that disposal by Amar and the trustees. Amar will not be entitled to private residence relief when he disposes of the dwelling house.

This example illustrates how section 226A denies relief. In practice it is unlikely that the claim would be made because of the tax consequences. In theory the claim to gift-hold over relief could be made after Amar had disposed of the property. In that case the gain on the 23 January 2004 disposal would be re-calculated to give the gift hold-over relief and the private residence relief given on Amar’s disposal would be withdrawn.