CG65114 | Private residence relief: example: sale of dwelling-house: land exceeds permitted area
From HM Revenue & Customs · Capital Gains Manual
The example at CG65113 was simplified by the fact that there was no non-residential use of the dwelling-house. One part of the gain was wholly relieved while the other was wholly chargeable. If there have been periods when the dwelling-house has not been its owner’s only or main residence the computation is a little more complicated.
D acquired a dwelling-house with four hectares of land in August 2012 for £150,000. She lived in it until October 2014 as her only residence. In that month she bought a second dwelling-house and began to live in it as well. She made a nomination under s222(5) TCGA92 in favour of the second residence within the time allowed (see CG64495). In November 2020 she sold her first residence together with its grounds for £400,000.
She agrees with the Valuation Office that the permitted area should be one hectare and that the necessary apportionments should be:
| Description | 2012 (£) | 2020 (£) |
|---|---|---|
| Dwelling-house and permitted area | 130,000 | 300,000 |
| Remainder | 20,000 | 100,000 |
| - | 150,000 | 400,000 |
Her gain is computed as follows:-
| Minus | Description | Dwelling-house and permitted area (£) | Remainder (£) |
|---|---|---|---|
| - | Disposal proceeds | 300,000 | 100,000 |
| less | cost | 130,000 | 20,000 |
| - | Gain | 170,000 | 80,000 |
The gain arising on the land outside the permitted area is chargeable in full, but some relief is due on the dwelling-house and the permitted area.
Private residence relief
Period of ownership is August 2012 - November 2020 = 100 months
Period of only or main residence is August 2012 - October 2014 = 27 months
Final period allowed by s223(2) TCGA92 = 9 months
The relief is 27 + 9 / 100 x £170,000 = £61,200
The chargeable gain will be £108,800 + £80,000 = £188,800 before the annual exempt amount.