Capital Gains Tax - Residential Property

The fact that a taxpayer's main residence is exempt from the tax is almost certainly the most widely known feature of CGT on property. But, as always with tax, although true, it is loaded with ifs and buts.

If more than one property is owned and available, i.e. not rented out, then the individual can elect for whichever they wish to be the main residence, provided that they have used the relevant property as a residence and notice is given within two years of having any particular combination of residences.

A married couple can have only one main residence exemption between them, so long as they are living together.

A property may only intermittently have been a main residence -- perhaps because it was occasionally rented out, or maybe the owner had another property that was elected as a main residence. In this instance, any gain on disposal must be apportioned on a time basis between the exempt main residence period and the taxable non-main residence period.

One of the special property CGT reliefs comes to your aid here, because apart from the factual period of main residence, the last 36 months of ownership is also treated as though it was main residence, even though it may not have been, typically because it was let.

Please see the HMRC website for more information on CGT and property.