Q. I’m thinking of selling my property and need some advice on Capital Gains Tax – will I be Liable?

A. Private Residence relief is the name given to the tax relief designed to ensure that most people don’t face a Capital Gains Tax bill when they sell their home. 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 (CGT) 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:

  • have a garden or grounds that extend to more than 0.5 hectares (roughly the size of a football pitch)
  • have extensive outbuildings
  • have used any part of it exclusively for business purposes
  • bought it primarily in order to make an early sale at a profit

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 CGT.

Whether or not you still qualify for some private residence relief will depend on your exact circumstances, so if in doubt, ask your HM Revenue & Customs (HMRC) Tax Office for advice.

Even if you no longer live in your property, you can still qualify for the full amount of private residence relief, provided that:

  • the property has been your main home from the time that you bought it
  • it has otherwise fully qualified for private residence relief (for example, you have not used part of the property exclusively for business purposes)
  • you sell it within three years of moving out or it no longer being your main home

If you have been working abroad you will normally be treated as though you have lived in theUKproperty, and so qualify for private residence relief, provided that both of the following apply to you:

  • you live in the property both before and after your absence
  • you have no other home which qualifies for private residence relief

This relief also applies when it is your 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 your partner to work elsewhere. Finally, If you live in more than one property you can tell your Tax Office which one you want to be treated as your main home, or ‘principal residence’, for CGT purposes. You do have to reside in, not just own, the property to nominate it as your main home.