Selling a property that was your home

selling a property that was your home

When selling your home, there are plenty of things to consider and take care of, but tax does not usually fall under that umbrella. The good news is that you typically don’t have to pay tax on the sale of your home or primary residence which is its official name.

Capital Gains Tax (CGT) is normally due on a property sale, but only if it is an investment which your main home is not.

However what happens if you’re selling a property that was your home in the past but now you are renting it?  Or you are selling your home but previously it had tenants in it.

When you sell a property that is your current or previous home, you must consider CGT.  You will need to crunch the numbers and see what if any profit was made that requires reporting to HM Revenue and Customs (HMRC).


What is PRR?


Any capital gain you make will need to be reported to HMRC and you may also need to pay the tax.  You will have 60 days to report the gain and make any payments.


When calculating the tax you owe, you will be entitled to the Private Residence Relief (PRR).


PRR is a tax relief available against any potential CGT.  It’s a tax relief to reflect the period the property was occupied as your main home.


Who is entitled to PRR?


If you have ever lived in a property that you are now selling you will be entitled to PRR.


There are some conditions which should be met to qualify for such relief. A full list of these conditions can be found on the government website, here.  There are numerous useful examples available too which you may find handy.


However, let us focus on a typical scenario here to demonstrate how the relief works.



Mr Smith purchased a property in 2011 and lived in it for 6 years. In 2017 Mr Smith bought a second property and began renting out his former home. Mr Smith has been declaring his rental income on his tax return.


In 2023 Mr Smith decided to sell the property he was renting. Mr Smith is entitled to claim PRR for the period in which he occupied the property as his main residence i.e. 2011 – 2017.


Mr Smith also has 60 days to report his disposal by way of a CGT Return.



How much relief would you get?


The amount of relief you will get depends on the qualifying period of ownership and period of residence calculated. This varies for everyone.


However, the basic formula for claiming PPR is:


PPR Relief =  Period of occupation (months)/ Entire period of ownership (months) X Gain




What if the property is held jointly?


If you are selling a property that was your home and the property is held with another person, you can still get the relief.


Assuming both of you lived in the property, you will both be entitled to a share of this relief. The share depends on the share of the ownership of the property.


But let’s say only one of you lived in the property, in that case, that person would be entitled to the relief and a lower capital gain.  The person who never lived in the property will calculate their gain and will not be entitled to any PRR relief.



How/when do you claim PRR?


PRR is calculated at the time of the disposal occurring. You need to make sure you have all of the following information.


  • Period of ownership – how long you have owned the property
  • Period of main residence  – how long you lived in the property
  • Gain on the disposal – this is normally the sale price less cost plus any expenses like legal fees.


The relief will be claimed on your 60 day Return.  You will need to create a government account before you can report any gains.  Whilst your solicitor will deal with the conveyancing, reporting the tax is your responsibility so please be aware of the tight reporting deadline.


You can find the full HMRC guidance here when selling a property that was your home.  The guide also has a calculator that you may find handy.

Many people find selling a property a stressful experience and would love it if someone could make it all easier.


If this is you and you are looking for in-depth advice and to ensure you optimise your tax position have a look at how we work.

We are happy to do all the heavy lifting for you so you don’t have to.  Selling a house is stressful enough as it is.

If you are working with us please email your normal manager if you have questions or if you need help.