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Capital Gains Manual

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Private residence relief: example: partial relief despite residential use

B acquired a house and 0.2 hectare garden in January 2001 for £190,000. She occupied the property as her only residence until May 2004 when she acquired a second house which she also used as a residence. A nomination under TCGA92/S222 (5) was made within the time allowed, see CG64495, in favour of the second residence. In June 2010 the first house, together with its garden, was sold for £450,000.

The house falls within TCGA92/S222 (1)(a) because at some time in B’s period of ownership it has been her only or main residence. The garden falls within TCGA92/S222 (1)(b) because, at the date of sale, it is occupied by her as the garden of that residence and is smaller than the area set out in CG64815.

To compute relief under Section 223(1) and (2) in this case you do not need to distinguish between the house and the garden.

    £
     
  Disposal proceeds 450,000
less Cost 190,000
  Gain 260,000

PRIVATE RESIDENCE RELIEF

  • Period of ownership Jan 2001 - June 2010 = 114 months
  • Period of only or main residence
  • Jan 2001 - May 2004 = 41 months
  • Final period allowed by TCGA92/S223 (2) = 36 months

The relief is 41 + 36 x £260,000 = £175,614

                          114

The chargeable gain will be £84,368 before annual exempt amount.

If the first house was disposed of on or after 6 April 2014 the final period exemption would be limited to 18 months see CG64985.