Principal private residence relief ― dwelling-house and permitted area

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Principal private residence relief ― dwelling-house and permitted area
  • What is a dwelling-house?
  • PPR relief for land associated with the dwelling-house

Principal private residence (PPR) relief is available to reduce the chargeable gains on the disposal of (or disposal of an interest in):

  • a ‘dwelling-house’ or part of a dwelling-house which is or has at any time in the period of ownership been the taxpayer’s only or main residence, or
  • land he has for his own occupation and enjoyment with that residence as its garden or grounds up to the ‘permitted area’

TCGA 1992, s 222(1)

It is possible for a taxpayer to have more than one residence. In these circumstances, the taxpayer has two years from the acquisition of the second residence to nominate which is to be the main residence for PPR relief. The nomination can be varied at a later date. If no nomination is made the main residence is determined based on the facts, although there are ways of reopening the nomination period. For more detail, see the Principal private residence relief ― more than one residence guidance note.

HMRC has not given any guidance about how long a taxpayer must live in a property for it to become his residence. The Officer will look at the individual facts and circumstances of each case. The taxpayer must satisfy HMRC that, for that short period, the property was his home and that this had some degree of permanence; think quality of occupation not quantity.

The mechanics of the relief are discussed in detail in the Principal private residence relief ― basic principles guidance note. The purpose of this guidance note is to summarise the case law on dwelling-houses and permitted areas to help you decide on the buildings and land that qualify for PPR relief.

What is a dwelling-house?

The legislation does not define the term ‘dwelling-house’.

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