Private Residence Relief query

I have just sold a property which I owned for 10 years. For the first 3 years I lived in the property as my main residence. For the last 7 years, I let the property out and lived elsewhere. According to the worked example here (https://www.gov.uk/tax-sell-home/let-out-part-of-home) I would get Private Residence Relief for 3 years out of 10 (30%), plus the last 9 months of ownership. But when I finished living in the property, I tried to sell it. I had an offer accepted via an estate agents. The sale ended up falling through and I decided I could rent out the property instead. As a rough example, I bought the property for £330,000 and sold it for £380,000. The gain in value is £50,000 over 10 years. But the agreed offer when I tried to sell the property after 3 years was £370,000, so £40,000 of the gain occurred when I was living in the property as my main residence, and while I let the property out for the last 7 years the gain was only £10,000. Am I able to say that the gain I would need to pay Capital Gains Tax on is just £10,000 (i.e. the difference between £370,000 and £380,000) or do I need to take it as 30% of £50,000 (i.e. the difference between the original purchase price of £330,000 and the final sale price of £380,000). Thanks for your help.

Hi,

The gain is based on the difference between the purchase price and the disposal value, the completed sale. Private Residence Relief for the period you lived in the property then reduces the gain. You can see guidance here:

HS283 Private Residence Relief (2024)

Thank you.