Chadwick Accountants & Bookkeepers Ltd
It’s a common pitfall: you buy a property, live in it for a while, then life happens. Maybe you move away, rent it out for a bit, or leave it empty, and then eventually move back in. When it’s finally time to sell, you assume you won’t have to pay Capital Gains Tax (CGT) because, after all, it was your home… right? Well, not always. Private Residence Relief (PRR) can reduce or even eliminate your CGT bill when you sell a property that’s been your main home. But there are some conditions
If you’ve rented out the property or left it empty for any period of time, then only part of the gain might be exempt, not the whole lot.
Under current HMRC rules (as of the 2024/25 tax year), the final nine months of ownership are automatically treated as if you lived in the property, even if you didn’t. So, if you lived there before renting it out - and the rental period (plus any other absences) doesn't exceed nine months - you might be in the clear.
If you have rented out for a property for couple of years (or more) before moving back in, in those cases, only part of the gain will qualify for PRR, and the rest could be taxed.
Don’t assume you’re exempt from Capital Gains Tax. If you’ve rented out a property, even if it was once your home, it’s best to get the numbers checked before you sell - nobody likes a surprise bill from HMRC
Need help working it out?
At Chadwick Accountants we’d love to take the stress off your shoulders. Give us a call on 01789 773 182 or email [email protected] and let’s make sure your sale doesn’t come with an unexpected tax sting.
