What is Principal Private Residence Relief?
Sometimes when property owners sell a house which they may have used as their main residence at some point, means they are entitled to claim relief for this period when calculating Capital Gain Tax.
How does Principal Private Residence Relief work now?
Currently, property owners disposing of a dwelling, which at some point of ownership was used as their only or main residence, are entitled to claim principal private residence relief (PPR) for the period of ownership as well as the final 18 months regardless of the use of the property.
What are the changes to Principal Private Residence Relief from 6th April 2020?
- Final period of ownership
One of the changes is a reduction of the final exemption period from 18 months to 9 months, except for property owners with a disability or for those that are a resident in care home, who will remain entitled to a final exemption period of 36 months.
- Letting exemption
Letting relief currently applies where an individual lets out their only or main residence as residential accommodation for part or all of their period of ownership. On disposal, the individual is entitled to relief at the lower of:
- the amount of PPR relief available
- the chargeable gain arising from the letting
- £40,000
As it currently stands, there is no requirement for the individual to occupy the dwelling whilst they let it out. However, for disposals on or after 6 April 2020, letting relief will only be available for the periods in which the individual has had shared occupancy with their tenants.
If you would like any further clarification or help reporting your disposal of a property to HMRC then Lucy will be delighted to help you, you can contact her on lucy@tiaccountancy.co.uk or ring us on 01229 490341.
