Full PRR when selling old house shortly after buying new?

Home A has been my main and only residence where I have lived continuously since 2006. I am now buying home B, before selling A. I will therefore own two homes, but hopefully for no more than 6 months, during which time I believe I can nominate either A or B as my primary main residence. Provided I sell A within 9 months of buying B, am I correct in believing I qualify for full private residence relief and there is no CGT liability now, or on a future sale of B, no matter which property is nominated during the short overlap period, assuming B becomes my main and only residence after selling A?

Hi Andrew Holme,

Please see HS283 Private Residence Relief (2023).
Please note you will receive PRR for the period you lived in the property plus the final 9 months.
If you actually live in the property in any of the final 9 months this is already included as part of the initial PRR and you cannot claim it again.


Thank you.
 

I face the choice of which residence to live at for the period when I own two. I need to understand the CGT implications of this choice on the sale of A and on a possible future sale of B. I think your answer confirms my understanding of the consequences of moving to B straight away after purchasing it and leaving A empty for up to 9 months until it is sold. What if I can't sell A in 9 months? There is also a 24 month rule. Is it not actually safer for me to remain at A? Obviously there would be no CGT on the sale of A in this case. But do I not also get full PRR for the first 24 months of my ownership of B?

Hi,
 

If you dont sell  property A within the 9 months after moving out, you will be liable to capital gains for any excess period. The 24 month rule you refer to is having to notify HMRC which is your main residence as you need to tell us within 2 years of the date in which the 2 properties are held at the same time. If you opt for A, you then lose the right to claim PRR for the same period on B . Thank you.

I was referring to the following sentence in HS283: "If, for up to a period of 24 months you do not occupy your new home when you acquire it because you’re unable to sell your old home, or [....], you can treat up to the first 24 months as if the house had been your only or main residence in that period." What does this sentence mean in my case? What concession is being given here? It cannot be the same as just opting for B.

Hi,

The period of absence you refer to relates to the occupation of a new home when you are unable to sell your old home. If however you have claimed private residence relief in this 24 month period for property A, you cannot then claim private residence relief for the same period for property B.  

If you live in, as your home, 2 or more houses, you can only have one main residence at a time for Private Residence Relief within:

HS283 Private Residence Relief (2023)

Thank you.

To be 100% clear: I can only have one main residence at a time; however, I can receive PRR on home A and PRR on home B covering the same time period of up to 9 months during which I own both. Is this correct? Scenario: Sell home A less than 9 months after buying home B. Make B my main residence from day of purchase. Thanks.

Hi Andrew Holme,

The final 9 months of your period of ownership always qualify for relief, regardless of how you use the property in that time, as long as the dwelling house has been your only or main residence at some point. If you are living in the property within those final 9 months, they are not added on again.

Thank you.

That is not what I am trying to ask. Let me put it another way: Property B will always be my main residence from the day of purchase; and my only residence after the sale of property A; however, there will have been a short period at the beginning of my ownership of B for which I received PRR on the sale of A. Can I claim 100% PRR on a future sale of property B?

Hi
No as you have already used part of it for the period that the 2 properties overlapped.

That feels unfair. I am not keeping a holiday home. I am not buying to let or for gain. I am just moving house. I have made a decision to proceed with a purchase despite having problems with my sale. According to CG64985 the whole purpose of the final period exemption is to help people in my circumstances. Yet it seems HMRC giveth with one hand and taketh away with the other since there will be a liability on a future sale of the new home. So the exemption is not really helping at all? I find that hard to believe. I ask if you would please re-check the rules. My sense of fairness says there should be no liability now or way off in the future in my circumstances.

Hi,

You can see guidance here:

CG64485 - Private residence relief: only or main residence: two or more residences: right of nomination

and the subsequest next 2 pages from that link. 

Thank you.

Thanks. I spoke to a specialist tax adviser who confirmed that the sole purpose of the CG64985 final period exemption is a concession to help people precisely in my situation. It is one of the very few scenarios where you do get relief on two properties for the same time period. https://www.gov.uk/tax-sell-home/absence-from-home Quote: "If you’ve nominated a home you cannot get relief for another property for the time your home is nominated, apart from for the periods that always qualify for relief." Note: "apart from for the periods that always qualify for relief." This is me selling property A: https://www.gov.uk/tax-relief-selling-home/y/yes/no/no/no Quote: "If you’ve nominated a home you can’t get relief for another property for the time your home is nominated, apart from for certain periods that always qualify for relief. You always get relief for the last 9 months you own a property." This is me selling property B several years later: https://www.gov.uk/tax-relief-selling-home/y/no/no/no-i-ve-not-lived-away/no Scenario: Property A sold after buying property B. Property B is nominated from the day of purchase. Am I correct?

Hi Andrew Holme,
When you acquire a second property and you elect for the second property to become your main residence from the date of acquisition, you should report this in writing to HMRc within 2 years of the second acquisition.
Private Residence Relief (PRR) is then transferred to the second property.  
For the Private Residence Relief calculation on property, you would work out the number of months the property was your main residence and add a further 9 months to this figure.
You then work out the number of months from the acquisition to the disposal, which will give you a fraction  X/Y * Capital gain, to work out the PRR.
This figure is then deducted from the capital gain, to work out how much gain is taxable.
Thank you. 

I live with my wife in a house that is in my sole name, though it is also her main residence. I have progressed MND and need to move as the existing house is dangerous for me now. My (our) house is on the market but the market is very slow. However, we have found the perfect next home. As I am dying, I want to put the new home solely in my wife's name, to save on issues when I die (my life expectancy is 12 to 48 months). As it happens, under Stamp Duty rules she would be a first time buyer, but our motivations are to move to a safer home. I am leaving my entire estate to my wife, value just under £1 million in total, so no CGT I believe. So, my (our present main residence) home A, her (our next main residence) home B. I am lucky enough to be able to buy her home B with my savings plus a £50,000 bridging loan before I sell my home A. We will immediately move to her home B while I sell my home A, 100%, and hopefully soon. I see from the above posts that there is a "grace period" (for lack of a better term) before HMRC is entitled to CGT on my home A. Is it 9 months or 2 years? Or am I wrong? Finally, will HMRC accept an exemption to any CGT being due if I excede the time limit under the Equality Act 2010 if I have hospital / doctor letters saying I had to move due to my illness?

Hi,
CG64985 advised that for disposal on or after 6 April 2020, the final period of ownership that qualifies for relief is 9 months, unless the disposal is by disabled persons or persons in care homes. Please have a look at the guidance at CG64986 for more information:
CG64986 - Private residence relief: final period exemption
Thank you