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HMRC internal manual

Capital Gains Manual

Private residence relief: purpose of realising gain: application

TCGA92/S224 (3)

The second part of TCGA92/S224 (3) is more often applied than the first. It applies where there has been expenditure incurred after the beginning of the period of ownership and incurred wholly or partly for the purpose of realising a gain from the disposal of the dwelling house.

While the first part of Section 224(3) denies relief on the whole of the gain the second part is less restrictive. It only denies relief on the part of the gain attributable to the expenditure. The statute does not provide any method of computing that gain. The examples at CG65257, CG65270 and CG65271 illustrate how the computation should be carried out in appropriate circumstances.