What is it?
Principal Private Residence relief, or PPR, is a relief that enables taxpayers to sell their homes without having to pay Capital Gains Tax.
What are the rules?
To be eligible to claim this relief, the property being sold must be the taxpayer’s main residence.
There are also detailed rules in connection with periods of ownership and absence, including job related absences, as well as relief if the property is let – please see article Principal Private Residence relief for full details.
What is changing?
There have been some significant recent changes to Principal Private Residence relief announced in the UK Budget in October 2018.
These changes could reduce the amount of Capital Gains Tax relief available on the sale of a private residence, and are due to come into effect from April 2020.
There are 2 key changes:
- Currently, homeowners that let all or part of their house benefit from letting relief of up to £40,000 (£80,000 for a couple). From April 2020, Letting Relief will only be available to those property owners who are in shared occupancy with a tenant. Please note that the relief is not available on a ‘buy to let’ property in which a taxpayer never lived.
- Currently, if a property has been occupied at any time as an individual’s private residence, the last 18 months of ownership are disregarded for Capital Gains Tax purposes. This relief applies even if the individual was not living in the property when it was sold. From April 2020, this final exempt period will be reduced from 18 months to 9 months (this exempt period had already been reduced from 36 months to 18 months from April 2014).
Please get in touch if you would like to discuss the implications of the above changes to this fundamental tax relief.
Please do feel free to get in touch if you have any specific questions in connection with the above.
Farley Kaye FCA
Managing Partner
For more information please contact Farley:
farley.kaye@fkgb.co.uk
052 627 7472
