Private Residence Relief (PRR) is the relief that wipes out the gain when you sell your main home. Most homeowners never have to think about it because the relief is automatic and total. The complications start when a property has been your home for some of the period you owned it — and your gain is partially exempt.
This guide explains the rules in the order HMRC expects you to apply them. It is reviewed by a Chartered Accountant/Chartered Tax Advisor against HMRC HS283: Private Residence Relief and the CG64200 series of the Capital Gains Manual.
The basic relief
Section 222 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) exempts any gain on the disposal of a dwelling-house (plus up to half a hectare of garden and grounds) that has been your only or main residence throughout the period you owned it.
If the conditions are met for the whole period of ownership, the gain is fully exempt and there is no need to file a 60-day return. Our guide to selling your main home completely CGT-free covers what that looks like in practice.
PRR is calculated as:
Exempt gain = Total gain × (Months of occupation as main residence + Final period exemption) ÷ Total months of ownership
The "months of occupation" piece includes both actual occupation and any deemed occupation periods (covered below). The final period exemption is a fixed 9 months (extended to 36 months in specific disability/care-home scenarios).
Worked example
Pat bought a flat on 1 January 2010 and sold it on 31 December 2024. Total ownership: 180 months.
Pat lived in it as their main home from January 2010 to December 2015 (72 months). It was then let to tenants until sale.
- Actual occupation: 72 months
- Final period exemption: 9 months
- Eligible months: 81 months
- Ownership total: 180 months
If the chargeable gain (after costs) is £120,000:
Exempt gain = £120,000 × 81 ÷ 180 = £54,000 Chargeable gain = £120,000 − £54,000 = £66,000
After the £3,000 annual exempt amount, the taxable gain is £63,000. At a 24% higher rate, the tax is £15,120. This is the figure the 60-day return would report.
Deemed occupation
HMRC treats certain periods as occupation even when you were not physically living in the property — provided you lived there at some point both before AND after the gap (with limited exceptions). The main deemed-occupation rules in s.223 TCGA 1992:
| Period | Reason | Limit |
|---|---|---|
| Up to 3 years | Any reason — travel, second home elsewhere, family moves | Aggregate, lifetime |
| Up to 4 years | Employment in the UK that required you to live elsewhere | Absences totalling 4 years if employer required it |
| Any length | Employment outside the UK | Unlimited |
| First 24 months | Off-plan / new-build where you couldn't yet move in | First 24 months |
To claim deemed occupation you generally need to have lived in the property at some point both before and after the absence. The "after" test was relaxed for overseas employment and UK employment where your employer required it.
The 9-month final period
You are deemed to have occupied your main home for the final 9 months of ownership regardless of actual use. This is a fixed period — it was 18 months before April 2020 and 36 months before April 2014. The 9-month final period is automatic; you don't have to claim it.
Disabled persons, and people moving into a care home, retain the older 36-month final period — see HMRC CG65046.
Lettings relief (post-April 2020)
If you let your property while it was your main residence (shared occupancy), some lettings relief may still be available. Since April 2020, lettings relief only applies where the owner shared occupation with the tenant during the let period. The pre-2020 rule (covering buy-to-let-style absences) has been abolished. Our lettings relief guide walks through the current scope. For the specific PRR rules that apply when you sell a property you used to rent out, see our guide on CGT when selling an ex-rental property.
Garden and grounds
PRR covers a dwelling-house plus its garden and grounds up to half a hectare (about 1.24 acres). Beyond half a hectare, HMRC may accept relief if the additional land is "required for the reasonable enjoyment of the residence as a residence" — but this is fact-specific and increasingly contested.
If you sell off part of the garden before selling the house, the timing matters. Sell the garden after you've left the property and PRR is lost on that disposal.
More than one home
If you own more than one home, you can elect which one is your main residence — but you must do so within two years of acquiring the second residence. Elections are made under s.222(5) TCGA 1992 and can be varied by giving notice to HMRC.
If no election is made, HMRC determines main residence by reference to the facts: where you actually lived, where your spouse lived, where your possessions were, your registered address with banks and HMRC, etc.
Married couples and civil partners living together can only have one main residence between them. For a detailed breakdown of when periods away from the property still count toward PRR, see our guide on PRR and qualifying absences.
Letting part of your home
If you let a self-contained part of your home (a granny annex, separate flat), PRR is restricted to the part you occupy as a main residence. The unlet part remains fully covered; the let part is chargeable subject to lettings relief (if conditions met) and the annual exempt amount.
Using part for business
If you used a room exclusively for business (e.g. a beauty salon with no domestic use), PRR is restricted. If a room was used for business and as part of your home (e.g. a home office that the family also used), PRR is not restricted — the s.224 TCGA 1992 test is exclusive business use.
Common PRR mistakes
- Forgetting the 9-month final period. It applies automatically.
- Overstating actual occupation. "We used it at weekends" is not main-residence occupation.
- Missing the 2-year election window when buying a second home.
- Assuming PRR fully covers a let-out former home. It often only covers the lived-in years plus 9 months.
What we do for you
If you sold a property that was at some point your main home, we apply PRR, the final period exemption, deemed occupation (where you qualify), and lettings relief (post-2020 shared-occupancy). The Chartered Accountant/Chartered Tax Advisor reviewing your return reconciles each claim against HMRC's manuals and your evidence.
Further reading
- The 60-day CGT property deadline
- Lettings relief after April 2020
- Joint ownership and CGT
- HMRC HS283: Private Residence Relief
- HMRC Capital Gains Manual: CG64200+