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Can I claim Private Residence Relief when selling a property?

21.06.2021

Private Client

Private Residence Relief (PRR) is a generous tax saving.  If the conditions are satisfied - it allows you to sell your only (or main) home without having to pay Capital Gains Tax (CGT). 

 

The pandemic has resulted in many of us reassessing where we want to live and work - and we are seeing an increase in the value of residential property in the UK. 

 

If you are thinking of selling your residential property -this is a good time to assess your eligibility for Private Residence Relief before you sell. 

 

The PRR legislation is complex and unexpected tax bills can arise for the unwary.  We’ve seen instances where PRR is not available in full - here are just a few examples:

 

 

A successful PRR claim relies on there being quality family occupation over time.  So if you buy a property, renovate it in a short period of time and then sell it before doing the same thing all over again, expect HMRC to argue that you are trading and try to charge ‘Income Tax’ on ‘profits’ realised at a maximum rate of 45%! 

 

In recent years, we’ve seen HMRC challenged PRR claims.  If you have a large garden, have not continually occupied your property as your home throughout your entire period of ownership, or use part of it for a dedicated business purpose, we will help you determine how much PRR you can claim and calculate the likely amount of CGT payable, prior to its sale. 

 

Don’t forget that residential property gains need reporting and CGT paid to HMRC within 30 days of completion!

 

CONTACT US

 

Call Sarah Tucker or Nicola Valentine on 01223 810100 for a range of property tax advice.

 

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