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HMRC internal manual

Capital Gains Manual

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

Marianne acquired her house on 30 June 1999 when the trustees of her family trust transferred the property to her for no consideration. The trustees and Marianne claimed gift hold-over relief under TCGA92/S260 (see CG67030+) and the entire chargeable gain of £120,000 was held-over.

Marianne occupied the house from 1 July 1999 until she sold it on 31 July 2009 giving rise to a chargeable gain before any reliefs of £325,000.

Her total period of ownership was 121 months (from 1 July 1999 to 31 July 2009), of which 53.29 months were in the period before 10 December 2003.

Marianne’s acquisition cost of the house (for CGT purposes) was reduced because of the relief claimed by the trustees under section 260. Therefore she will not be eligible for private residence relief in respect of the period from 10 December 2003 to the sale on 31 July 2009 (see CG64933). Private residence relief will be due for the period from 1 July 1999 to 9 December 2003. There will be a chargeable gain on which capital gains tax will be payable which will be calculated as follows:

Chargeable gain before private residence relief   £325,000
Fraction eligible for private residence relief 53.29 ÷ 121 x £325,000 = £143,135
Chargeable gain   £181,865