Full relief from Capital Gains Tax:
In general, taxpayers are entitled to full relief from CGT where all the following conditions are met:
1. The family home has been the taxpayers’ only or main residence throughout the period of ownership.
2. The taxpayer has not been absent from the home other than for an allowed period of absence or because they have been living in job-related accommodation, during the period of ownership.
3. The garden or grounds including the buildings on them are not greater than the permitted area.
4. No part of the family home has been used exclusively for business purposes.
Do you own more than one property?
Complications can arise if you and your civil partner own more than one property as you are only allowed one tax exemption as described above. Essentially you will need to make a formal election, tell HMRC which property is to be considered your principal private residence (PPR).
In more detail…
- The final three years of ownership of a property that has been your PPR at any time is ignored for CGT purposes.
- If you are required to work abroad by your employer those periods of occupation of your PPR will be ignored.
- Complications may arise if the size of property and land attached is over 5,000 square metres.
- If you run a business from home CGT will not be due if the space is not used exclusively for business purposes.
This is a complex tax area. If you own more than one property you should take advice to ensure you protect your tax position. Please give me a call if you have any queries or concerns.
Sue Stephens – Personal Tax Consultant