CG64990 - Private residence relief: final period exemption: cannot exceed gain

If the dwelling-house is used for part or all of the final part of the period of ownership as its owner’s only or main residence, that period may qualify for relief both as a period of residence and as part of the exempt final period. This period should only be counted once in computing relief. This is illustrated below.

Example

An individual acquires a dwelling-house in May 2011 and uses it as her only or main residence from August 2015 to June 2020. The house is sold in November 2020 and a gain of £50,000 before private residence relief arises.

The relief is computed as follows:

• Period of ownership is May 2011 - November 2020 = 115 months
• Period of only or main residence is August 2015 - June 2020 = 59 months
• Final period exemption is July 2020 - November 2020 = 5 months

The relief is 59+5 / 115 x £50,000 = £27,827

The chargeable gain is £22,173 (£50,000 - £27,827) before the annual exempt amount.