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Who qualifies for Private Residence Relief

Generally, if you have lived in your home and it has been your only home all the time that you owned it, you will not have to pay Capital Gains Tax on any money you make when you sell it because it will be covered by Private Residence Relief.

However, you may not qualify for relief on the whole property if you:

If you're selling your home and you own more than one property, or you've used part of the property for business purposes, such as using one room as an office, taking in lodgers or letting out all or part of the property for a while, you may be liable to pay Capital Gains Tax.

Whether or not you still qualify for some Private Residence Relief will depend on your exact circumstances, so if in doubt, you should contact HM Revenue & Customs (HMRC) by phone or letter for advice.

• More about Capital Gains Tax on selling property

• Contact HMRC - Capital Gains Tax enquiries Opens new window

When you no longer live in the property

Even if you no longer live in your property, you can still qualify for the full amount of Private Residence Relief, provided that:

Working abroad

If you have been working abroad you will normally be treated as though you have lived in the UK property, and so qualify for Private Residence Relief, provided that both of the following apply to you:

This relief also applies when it is your husband, wife or civil partner who was working abroad.

You will still get Private Residence Relief for your time abroad, even if you do not return to live in the UK house, provided that the only reason you do not come back to live in your former home is that the employer requires you (or your husband, wife or civil partner) to work elsewhere.

Owning more than one home

If you live in more than one property you can tell HMRC which one you want to be treated as your main home, or 'principal residence', for Capital Gains Tax purposes. You do have to reside in, not just own, the property to nominate it as your main home.

You have to make the nomination within two years of changing the number of properties you live in, whether the change is an increase in the number of homes or a decrease.

Failing to tell HMRC which is your main home

If you don't tell HMRC which property you want to call your main home, the question of whether a home that you sell has been your main home and eligible for Private Residence Relief has to be decided on the facts. So it makes sense for you to decide and notify HMRC before the two years are up.

You don't have to keep the same house as your main home. Once you have nominated a main home you can tell HMRC at any time that a different property should be the one that qualifies for Private Residence Relief but you cannot backdate the change more than two years. You have to reside in a property as your home for it to qualify.

Married couples or civil partners owning more than one home

If you are married or in a civil partnership and have two or more homes, both you and your spouse or civil partner must notify HMRC which of your homes is your main home for Private Residence Relief purposes - and it has to be the same one. Both of you should sign a notification.

• Download 'Helpsheet 283 - Private Residence Relief (PDF, 95K) Opens new window

• Help with PDF files

• Learn about the basics of Capital Gains Tax

• More about Capital Gains Tax on the HMRC website Opens new window

Self-employed and working from home

If you are self-employed and work from home you can still qualify for Private Residence Relief when you sell your home if the whole of your property is used as a home, even though you work there.

However, if any part of your property is used exclusively for business purposes, for example as:

you may have to pay Capital Gains Tax on part of the gain you make when you sell the property.

Selling a property you bought for someone else to live in

If you buy a house for someone else to live in and own it but don't live in it yourself, you will not be eligible for private residence relief when you come to sell the property. You are effectively making an investment in a property, so when it is sold at a 'gain' (profit) you will be liable to pay Capital Gains Tax on that gain.

One alternative is to give or lend money to the person so that they can buy the property themselves. If the property belongs to them and is their main residence they can claim Private Residence Relief when they sell it.

The law in this area can be complex so consider seeking professional advice. You should also look into the Inheritance Tax implications of making a gift.

• Find out about tax on selling property

Further information

It's a good idea to ask HMRC for advice when working out what your own position is, as all the factors in your individual situation will need to be taken into account.

If you need to find out more about how Capital Gains Tax applies to land and leases, HMRC publishes a helpsheet (HS292) to help you complete this section of your tax return.

One point to remember: Private Residence Relief is not available for your property (or part of your property) if it is used exclusively for a trade or a business.

• Download 'Helpsheet 202 - Land and leases, the valuation of land and Capital Gains Tax' (PDF, 102K) Opens new window

• Help with PDF files

• More about civil partnerships Opens new window

More useful links

• Learn about the basics of Capital Gains Tax

• Selling your home (home and community section)

• Moving to your new home (home and community section)

• Finding a new school when you move home (education and learning section)

Useful contacts

• Contact HMRC - Capital Gains Tax enquiries Opens new window