A gain arising on a property which has been an individual’s private residence throughout their period of ownership is exempt from CGT. There are deemed period of occupation rules which may help to provide an exemption from CGT even if the individual was not living in the property at the time. This may mean the individual is accruing private residence relief on another property at the same time.
The final period exemption applies to a property that has been an individual’s private residence at some time even though they may not be living in the property at the time of disposal.
The final period exemption will be reduced from 36 months to 18 months with two exceptions. An individual that is:
- a disabled person or
- a long term resident in a care home, where they have been there for at least three months, or can reasonably be expected to be resident there for three months, and
- has no other property, on which they, or their spouse or civil partner, can claim private residence relief
will continue to be able to claim a 36 month final period exemption.
The amended legislation has effect in relation to disposals:
- made on or after 6 April 2014, or
- made before that date under a contract, unless the conveyance takes place before 6 April 2015.
It is proposed that from April 2020 the government will make two changes to private residence relief:
- the final period exemption will be reduced from 18 months to 9 months.
- Lettings Relief will be reformed so that it only applies in circumstances where the owner of the property is in ‘shared-occupancy’ with a tenant.
The government will consult on the detail of both of these changes and other technical aspects.