SolvedCG64737 | Private residence relief: letting: whole residence let for period (for disposals prior to 6 April 2020 only)
From HM Revenue & Customs · Capital Gains Manual
Note: For disposals on or after 6 April 2020 lettings relief under s223B TCGA92 does not apply to a period during which the whole of the residence was let (see CG64710). Where the disposal was before 6 April 2020, lettings relief may be available for a period during which the whole residence was let under s223(4) TCGA92.
Example 1 - Property occupied as residence, let and left vacant before disposal on or after 6/4/14
Example 2 - Property occupied as residence and then let before disposal on or after 6/4/14
Example 1 - Property occupied as residence, let and left vacant before disposal on or after 6/4/14
A dwelling-house was purchased on 1 January 2007 and sold on 31 December 2019. It was occupied as its owner’s only or main residence from 1 January 2007 to 31 December 2012. It was let as residential accommodation from 1 January 2013 to 31 December 2015 and was then empty until it was sold at a gain of £150,000.
The computation is:
| £ | £ | |
|---|---|---|
| Net gain | 150,000 | |
| Private residence relief (£150,000 x (6 years + Final 1½ years*) ÷ 13 years) | 86,539 | |
| 63,461 | ||
| Relief under s223(4) TCGA92 limited to the lowest of | ||
| private residence relief | 86,539 | |
| or | ||
| s223(4)(b) TCGA92 | 40,000 | |
| or | ||
| gain arising by reason of the letting (£150,000 x (3 years ÷ 13 years)) | 34,615 | |
| Applicable limit | 34,615 | |
| Chargeable gain | 28,846 |
* Note: See CG64985 for details about ‘Final 1½ years’.
Example 2 - Property occupied as residence and then let before disposal on or after 6/4/14
A dwelling-house was purchased on 1 January 2007 and sold on 31 December 2019. It was occupied as its owner’s only or main residence from 1 January 2007 to 31 December 2012. It was let as residential accommodation from 1 January 2013 until it was sold at a gain of £150,000.
The computation is:
| £ | £ | |
|---|---|---|
| Net gain | 150,000 | |
| Private residence relief (£150,000 x (6 years + Final 1½ years*) ÷ 13 years) | 86,539 | |
| 63,461 | ||
| Relief under s223(4) TCGA92 limited to the lowest of | ||
| private residence relief | 86,539 | |
| or | ||
| s223(4)(b) TCGA92 | 40,000 | |
| or | ||
| gain arising by reason of the letting (£150,000 x (5½ years ÷ 13 years))** | 63,461 | |
| Applicable limit | 40,000 | |
| Chargeable gain | 23,461 |
*Note: See CG64985 for details about ‘Final 1½ years’.
**Note: Although the property was let for 7 years, the final 1½ years is already relieved by the final period of exemption. Lettings relief is only available against the part of the gain which would be chargeable by reason of the letting. No chargeable gain arises in that final 1½ year (18 months) period - s223(2) TCGA92.