I moved into a three storey freehold property on September 1982 and occupied the first floor of that property until 2003, and then became the freeholder of the property in April 2002. I moved to the ground floor in August 2003, then started renovating the first floor and decided to rent it out. Renovation started on the second floor in March 2005 and I decided to rent that as well. In 2006, I decided to sell the ground floor. On completion in 2007, I moved into a property that my wife owned. On my solicitor’s advice, a non-trading limited company was set up in 2010 to facilitate the issuing of two leases for both floors. I am thinking of selling the first floor flat but would like to be fully aware what my CGT would be should I proceed to sell.

See the HM Revenue & Customs Capital Gains manual at CG64305 and CG64309. From what I can glean, each flat is a self -contained unit, and therefore must be treated separately.  When you sell the first floor flat you will be eligible for principal private residence (PPR) relief for actual occupation from September 1982 until August 2003; also PPR for the last eighteen months of ownership (assuming the sale is after 5 April 2014) and the letting exemption for the period not covered by PPR. However when you sell the second floor flat both of these reliefs will not be available to mitigate the capital gains tax since you never actually occupied the second floor flat, and it is a separate entity to the first floor flat, as explained above.