Joe Brough explains how principal private residence relief applies to disposals of dwelling houses which have at some point been the owner’s main residence, and offers a selection of tips and potential traps.
The rules regarding principal private residence relief (PPR relief) are contained within TCGA 1992, s 222. PPR relief has the effect of removing from the charge to capital gains tax (CGT) the increase in value attributable to the period the property was occupied as the owner’s main or only residence.
So far, so simple; however, matters get complicated where the property has not always been the taxpayer’s main residence or there have been transfers of ownership between spouses. In these circumstances, relief is granted for deemed periods of occupation, which can reduce a CGT liability.
Deemed periods of occupation
PPR relief is
