Capital Gains Tax Principle Private Residence Relief Final Period Exemption

Published / Last Updated on 19/06/2019

Principle Private Residence (PPR) relief for capital gains tax on residential property is given based upon the total period of ownership that you occupy the property as your main home but do you also qualify for a Final Period Exemption?

  • E.g.1.  Own property for 13 years (156 mths) and occupy the property for 13 years (156 mths) then 156/156ths is proportion of the capital gain that is free tax under PPR i.e. 100% gain tax free.
  • E.g.2.  Own a property for 13 years (156 mths) and occupy the property for 5 years (60 mths) then rent out for 3 years (36 mths) then occupy again 5 years (60mths) before you sell = 120/156ths of the capital gain is tax free under PPR i.e. 77% of gain is tax free and 36/156ths of the capital gain is chargeable to capital gains tax i.e. 23%.

HOWEVER, DO YOU QUALIFY FOR A FINAL PERIOD EXEMPTION? ... 18 MONTHS

The final 18 months of ownership always qualifies for PPR relief regardless of the use of the property during that period.

  • E.g.3.  Own a property for 13 years (156 mths) and you occupy property continuously for 10 years (120 mths) and rent it out for FINAL 3 years before you sell (36 mths) but as a bonus the final 18 mths of ownership is classed as a FINAL PERIOD EXEMPTION (FPE) regardless of use (even though rented out).
  • 10 yrs (120/156ths) of the gain + 18 mths FPE 18/156ths is tax free under PPR i.e. 138/156ths (88.5%) of the gain is tax free and 18/156ths of the gain is subject to capital gains tax i.e. 11.5% of the gain is taxable.

NOTE:  THE FINAL EXEMPTION PERIOD DOWN TO JUST 9 MONTHS FROM APRIL 2020.


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