CG65125 | Private residence relief: example: disposal of garden/grounds within permitted area: part-disposal

G acquired a house with gardens of one hectare in May 2010 for £120,000. It was used as his residence throughout his period of ownership but was only his main residence from June 2013 to July 2016. In January 2021 he sold a piece of land of 0.3 hectares for £50,000 and submitted a computation of the gain on the part-disposal basis. The Valuation Office agreed that all of the land sold was within the permitted area and agreed that the value of the retained property was £280,000.

The gain is as follows:

Private residence relief

• Period of ownership is May 2010 to January 2021 = 129 months

• Period of only or main residence is June 2013 - July 2016 = 38 months

• Final period allowed by s223(2) TCGA92 = 9 months

The relief is 38 + 9 / 129 x £31,818 = £11,593

The chargeable gain will be £20,225 (£31,818 - £11,593) before the annual exempt amount.

If the dwelling-house had always been his only or main residence the gain would have been wholly relieved, and a computation would only be needed to establish how much of the cost of the property should be apportioned to this disposal.

If the land lay wholly outside the permitted area the whole of the gain of £31,818 would be a chargeable gain regardless of the use made of the dwelling-house.