Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
, see all updates

Private residence relief: delay in taking up residence: ESC D49

ESC D49 sets out three circumstances in which you should allow relief for a period between the acquisition of land, including land on which a dwelling house stands, and the beginning of residence in a dwelling house on that site. Those circumstances are,

  • where the delay in taking up residence is because a dwelling house is being built on that land,
  • where the delay in taking up residence is because of the continuing occupation of the previous residence while arrangements are made to sell it,
  • where the delay in taking up residence is because alterations or redecorations are being carried out.

The concession allows relief for a period up to 12 months, although where there are good reasons for the period exceeding 12 months which were outside the individual’s control the period may be extended up to 2 years. The extended period which can qualify for relief in these circumstances is explained at CG65009. The effect of these provisions is explained at CG65013.

Dwelling house being built on land

An individual may acquire land and have a dwelling house built on it. In these circumstances you can allow relief for the period between the acquisition of the land and the physical occupation of the dwelling house provided that

  • the period does not exceed 12 months , or longer if there are good reasons for exceptional delay

and

  • at the end of the period the new dwelling house becomes its owner’s only or main residence.

Example

A person bought land in January 2013, built a house on the land and took up residence on completion in December 2013. Private residence relief will be available from January 2013.

Continued occupation of previous residence

An individual may buy a dwelling house but not take up residence immediately because of a delay in finding a buyer for their current residence, which is on the market. In these circumstances you can allow relief for the period between acquisition of the new dwelling house and taking up residence provided that

  • the period does not exceed 12 months, or longer if there are good reasons for exceptional delay,

and

  • at the end of the period the new dwelling house becomes its owner’s only or main residence.

Example

A married couple decide to move house and in January 2013 put their current residence up for sale. In August 2013 they buy a dwelling house but do not move in immediately because their current residence has not yet sold. That residence finally sells in June 2014 and they move house. The new residence will qualify for relief from August 2013.

Delay due to alterations or redecoration

An individual may buy a dwelling house but not take up residence immediately because they undertake repairs, redecorations, or other such work. In these circumstances you can allow relief for the period between acquisition and taking up residence provided that

  • the period does not exceed 12 months, or longer if there are good reasons for exceptional delay

and

  • at the end of the period the new dwelling house becomes its owner’s only or main residence.

Example

An individual buys a dwelling house in April 2013 in a poor state of repair. It takes until March 2014 to render the dwelling house habitable and in that month the person takes up residence. The dwelling house will qualify for relief from April 2013.