Selling a Former Home? When You Can Still Claim Private Residence Relief Explained

When someone sells a home they used to live in, they might wonder if they can still claim Private Residence Relief to reduce their capital gains tax. They can claim this relief for the time they lived in the property as their main home, plus an additional nine months after they moved out. This means some tax relief can apply even if the property was rented out or left empty for a period.

This extra nine-month period helps protect sellers from paying tax on gains made during those final months of ownership. It is important to understand the rules clearly to make the most of this relief and avoid paying more tax than necessary.

Knowing when and how Private Residence Relief applies can make a big difference in the cost of selling a former home. This article will explain the key points to help sellers check their eligibility and plan their sale carefully. For more detailed guidance, see the information on Private Residence Relief on the official GOV.UK website.

Understanding Private Residence Relief

Private Residence Relief (PPR) is a tax relief that helps reduce the capital gains tax (CGT) paid when someone sells their main home. It ensures that people do not pay tax on all the profit made from selling a property that has been their principal private residence. The rules focus on how the property was used and owned during the period before its sale.

Definition and Purpose

Private Residence Relief, often called Principal Private Residence Relief, applies to the sale of a person’s main residence. The main home is where the individual usually lives. This relief aims to protect homeowners from capital gains tax on profits made from their main property.

The purpose of PPR is to acknowledge that the main residence is not an investment asset but a personal home. The relief eliminates or reduces tax when selling a property that has been the owner’s main residence for all or part of the ownership period.

How Private Residence Relief Works

Private Residence Relief exempts from tax part or all of the gain made on selling the main home. The relief covers each day the property was the principal residence and the final 9 months of ownership, even if the owner did not live there during that time.

If a property was rented out or unused for a time, only the part of the gain related to the time it was the main home qualifies for relief. The gain is calculated based on the time of actual residence and the last 9 months.

PPR can reduce the CGT called when selling the property, depending on the length of time the house was the owner’s main home and the total time owned. Details and examples can be found at HS283 Private Residence Relief (2025).

Eligibility Criteria for Private Residence Relief

Private Residence Relief (PRR) depends on specific rules about how long a person owned the home, lived in it as their main residence, and any time spent away under special conditions. These rules determine if someone can reduce or avoid Capital Gains Tax when they sell a former main home.

Period of Ownership Requirements

To qualify for PRR, an individual must have owned the property during the time it was their main home. The relief covers most of the ownership period but always includes the last 9 months of ownership, even if the property was not lived in during this time.

Ownership can be joint or sole. The period of ownership is calculated from the date the property was bought until the date it is sold. If parts of the home were rented out or used for business, those periods may reduce the relief.

Occupancy Rules and Main Home Status

The property must have been the owner’s only or main residence to qualify for the full PRR. The home does not need to be the main residence for the entire ownership period but must have been occupied significantly.

Living in the home for just part of the time can still qualify, but any time the property was not the main home is excluded from relief. For example, owning another property simultaneously as a main home can affect eligibility.

Absences and Special Circumstances

Certain absences still count as a period of main residence. For example, time spent working abroad, living elsewhere due to disability, or temporary business purposes may not reduce PRR eligibility.

The final 9 months of ownership always count for relief, even if the owner has moved out. Up to 36 months of absence can qualify if it’s the owner’s only home during that time. These rules help protect those who leave the property temporarily but intend to return.

More details on eligibility for these circumstances are explained in the Private Residence Relief guidance.

Claiming Relief When Selling a Former Home

Private Residence Relief can reduce or remove the Capital Gains Tax (CGT) owed when selling a former home. Certain rules around timing and specific exemptions affect how much relief a seller may claim. Understanding these rules helps in managing potential tax liability with HMRC.

Timing of Sale and Final Period Exemption

When selling a former home, the relief covers the time the property was the main residence. It also includes the final period exemption, which adds extra months after you stop living there.

Currently, this exemption lasts for 9 months. For example, if someone lived in the house for five years but sold it within 9 months after moving out, those last 9 months still qualify for no CGT. This rule helps even if the owner no longer lives there at the time of sale.

The final period exemption applies automatically, but only for the last 9 months before the sale. This part is important because it reduces the gain liable to tax, even if the property was let out or empty before sale. Sellers should keep clear records of residency and sale dates to prove entitlement to the relief.

Impact of the 2018 Budget Changes

The 2018 Budget made significant changes to Private Residence Relief concerning the final period exemption. Before April 2020, the exemption covered 18 months; however, it was reduced to 9 months afterward.

This reduction means sellers with a gap between moving out and selling may face increased CGT. The government lowered the exemption to reflect shorter average selling times.

The change particularly affects those who have let out their former home or lived elsewhere temporarily before selling. This could increase their tax liability because fewer months qualify for relief.

Despite this, certain exceptions still apply, such as disability or needing a carer, where the longer exemption may remain. Knowing these details helps sellers better calculate any potential CGT and avoid surprises from HMRC. For official guidance on claiming relief, consult the Private Residence Relief information from GOV.UK.

Letting Relief and Other Related Tax Provisions

Certain tax rules help homeowners who have rented out their former main home. These rules can lower the amount of Capital Gains Tax (CGT) due when selling such a property. Understanding the limits and types of relief available is essential for calculating tax correctly.

Understanding Letting Relief

Letting relief reduces CGT for people who have rented out their main home. It applies when a person has lived in the house as their main residence at some point. The relief lowers the taxable gain by up to £40,000 per owner.

If the owner lived in the property and rented it out later, they can claim this relief. The property must have been their only or main home during the period of ownership. Letting relief only works with Private Residence Relief and does not apply if the property was never a main residence.

Lettings Relief Restrictions

Recent tax changes have limited the availability of lettings relief. Now, it only applies if the owner lives in the property while renting part of it out, such as a room. If the home is completely let out after the owner moves away, lettings relief no longer applies.

The relief amount is the lowest of three figures:

• The amount of Private Residence Relief available
• £40,000 maximum relief
• The gain made during the let period

This means lettings relief often offers only a partial reduction in taxable gain.

Buy to Let Properties and Exemptions

Buy-to-let properties generally do not qualify for Private Residence Relief because they are not the owner’s main home. Without this relief, full CGT applies on any gain from sale.

However, if a buy-to-let property was at some time the owner’s main residence, partial relief might apply. Other exemptions may help reduce taxes, such as the annual CGT allowance or periods of deemed occupation.

Landlords should keep clear records of occupation periods and lettings to support any relief claims. 

Exceptions, Special Cases, and Additional Tax Considerations

Certain rules apply when private residence relief is claimed after selling a former home. These include specific situations for married couples and civil partners, the need for professional advice, and possible inheritance tax implications. Understanding these can help avoid unexpected tax charges.

Implications for Married Couples and Civil Partners

Married couples and civil partners usually benefit from shared ownership rules. If both lived in the home as their main residence, they can each claim private residence relief.

When the property is sold, the capital gain is divided between them. Each partner claims relief on their share, potentially doubling the relief amount.

If ownership isn’t equal, relief applies only to the share each owns. Transfers between spouses or civil partners are generally exempt from Capital Gains Tax (CGT), allowing easy changes in ownership to maximise relief.

It is important to keep records showing how the property was used and owned across the tax years. This helps when calculating relief and filing self-assessment forms with HMRC.

Working with Tax Experts and HMRC Guidance

Tax rules around private residence relief can be complex. Consulting a tax expert or accountant helps clarify eligibility and calculation of any taxable gains.

HMRC provides detailed guides, including the HS283 helpsheet, which explains how relief applies to sales between 6 April 2024 and 5 April 2025.

A tax expert can assist with claims when the property was partly rented out or used for business purposes, which affects the relief amount. Early advice also helps avoid penalties from incorrect tax returns.

Using professional support can ensure all tax year rules and exemptions are correctly applied, reducing the chance of unexpected tax bills.

Inheritance Tax on Former Homes

Inheritance tax (IHT) rules differ from capital gains tax. Even after selling a former home, there may be IHT considerations if the property is part of an estate.

If the home was passed on to heirs, its value at death counts towards the estate’s total. Spouses and civil partners typically get a full IHT exemption for assets passed to each other.

If the property was sold and the money was kept or invested, the new assets could affect IHT liability. Planning with a tax adviser can limit IHT, such as using main residence nil-rate bands or trusts.

Knowing these rules can help minimise tax liabilities when handling former residential property as part of inheritance planning.

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