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Changes to Private Residence Relief Legislation

Private Residence Relief (PRR) exempts capital gains where the seller has occupied the property as their main residence at some point during ownership. Some periods of non-occupation will also be exempted under the relief if certain criteria are met. HMRC have recently published draft legislation reforming the relief available on sale of residential property from 6 April 2020.

Under current legislation, the final 18 months of ownership will always qualify for the relief, regardless of occupancy status, however the amended legislation will reduce this period to 9 months. There is a further exemption for absences in the first 2 years of ownership due to refurbishment work or completing a new build.

The exemption provisions for transfers between spouses and civil partners have also been improved. Military personnel posted overseas and in receipt of the armed forces accommodation allowance will also benefit from the reforms.

Taxpayers who own and regularly live in more than one residential property will need to nominate their main residence for tax purposes. The deadline for making the nomination has been relaxed under certain circumstances, although it should still be made as soon as possible.

If you think you may be caught out by these changes, our Taxperts can review your overall tax exposure and make the necessary declarations on your behalf.

For more information and advice on property taxes, please get in touch with our Residential Property Taxperts.

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