C3.1709 Deemed occupation and calculation of PPR relief
Where the house has been the owner's only or main residence throughout the whole period of ownership, the PPR exemption extends to the whole of any gain arising on disposal. Conversely, where a dwelling house has not been occupied as a person's only or main residence (or is not deemed to be so occupied) throughout the period of ownership, private residence relief is only available for a proportion of the gain. However, the legislation treats certain periods of absence as deemed periods of occupation.
The period of ownership, generally, begins on the date the dwelling house was first acquired, or on 31 March 1982 if that is later. It ends when the property is disposed1. For more on determining the period of ownership see C3.1709A.
Calculation of PPR relief
The capital gain on the disposal of the dwelling house is calculated in the normal way for disposal of assets (see Division C.2). If a dwelling house has only been occupied as a person's only or main residence for part of the period of ownership, then a fraction of the gain is exempt from CGT because it attracts principal private residence (PPR) relief. This fraction consists of the length of the occupation (or deemed occupation) as the individual's own or main residence, divided by the whole length of the period of ownership.2.
The fraction is thus:
A is the total of the periods during which the dwelling house was owned by the taxpayer and used by them