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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Private residence relief: losses

Private residence relief applies to prevent a gain from being a chargeable gain, by virtue of TCGA92/S223 (1). It can also apply to make part of a gain a chargeable gain and part not, by virtue of Section 223(2). If private residence relief would apply on the disposal of a residence by an individual to wholly or partly relieve a gain, it will also apply to wholly or partly prevent a loss being an allowable loss (TCGA92/S16 (2), see CG15800). The computation of the loss and the restriction of that loss are dealt with in the same way as the computation of a gain and the restriction of that gain.

There are three circumstances in which private residence relief relieves a gain but does not prevent a loss from being an allowable loss. These are

  • Where relief is due under TCGA92/S223 (4)
  • Where relief is due under TCGA92/S225
  • Where relief is due under TCGA92/S226.

TCGA92/S223 (4)

The further relief, which is available when all or part of a person’s residence is let for a time as residential accommodation, restricts the chargeable gain by three limits, explained at CG64710. If no gain arises the limits cannot be applied. So the limits cannot be used to restrict a loss. If a person makes a loss on the disposal of their residence that loss would not be an allowable loss to the extent that private residence relief would have been available if a gain had accrued. But there is no further restriction of the allowable loss under Section 223(4).

TCGA92/S225

Relief under Section 225 where a private residence is occupied under terms of settlement is given on a claim by the trustees for disposals made on or after 10 December 2003, TCGA92/S225, see CG65400+. If a loss is made no claim will arise so Section 225 would not apply. Any loss on the disposal may be claimed as an allowable loss.

TCGA92/S226

Relief under Section 226 where a residence has been provided for a dependent relative is given on a claim by an individual, TCGA92/S226 (2), see CG65550+. If a loss is made no claim will arise and so Section 226 would not apply. The loss may be restricted if the property has been the individual’s only or main residence for a time but occupation of the property by the individual’s dependent relative will have no effect on the allowable loss.