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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Private residence relief: separation, divorce or dissolution of civil partnership: ownership matrimonial or civil partnership home

Mr and Mrs A bought a dwelling house in March 2003 and occupied it as their only residence until May 2007. Although the dwelling house was in Mr A’s name Mrs A contributed equally to its cost and to the mortgage repayments.

In May 2007 the couple separated permanently. Mr A moved out of the matrimonial home and bought a house elsewhere. Mrs A continued to occupy the house as her only residence. Solicitors for the parties agreed that Mrs A was entitled to half of the proceeds of sale of the house in recognition of her equitable interest.

In November 2012 the house was sold and a gain of £30,000 accrued to each of Mr and Mrs A before private residence relief.

Mrs A has always occupied the dwelling house as her only residence so her gain is fully relieved. There is a restriction of relief for Mr A.

Mr A

  • Period of ownership March 2003 - November 2012 = 117 months
  • Period of only or main residence

March 2003 - May 2007 = 51 months

  • Final period allowed by TCGA92/S223 (2) = 36 months*

The relief is 51 + 36 x £30,000 = £22,308

                           117

Mr A’s chargeable gain is £7,692 before annual exempt amount.

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