Private Residence Relief (PRR) is a valuable Capital Gains Tax relief that can eliminate the tax due when you sell your home. In simple terms, it applies to periods when a property has been your only or main residence. However, if you spend time living away from home, the position becomes less clear, and CGT may well be due.
The starting point is that you will usually get full relief for the time you actually lived in the property, plus some additional “deemed occupation” periods. Most notably, the final 9 months of ownership always qualify for relief, provided the property was your main home at some stage.
You may also qualify for relief during absences when you live away from your home. Broadly, this includes up to three years away for any reason, up to four years if working elsewhere in the UK, and unlimited periods if working abroad. In most cases, you must have lived in the property before and after the absence, unless work prevents your return.
There are also special rules for the first two years of ownership if the property was being built or renovated or you could not sell your old home.
Where you own more than one property, only one can qualify as your main residence at any given time. Married couples and those in a civil partnership are restricted to a single main home between them.
It is important to carefully keep track of time living away from your home in order to correctly be able to calculate if any how much CGT is due when your home is sold.
