If you’ve ever sold a home in the UK, you might have heard of Principal Private Residence (PPR) relief. It’s a bit of tax magic that can save you from paying Capital Gains Tax on the profit you make when selling your main home. But like most things involving tax, it can sometimes be complicated.

What is PPR relief?

In a nutshell, PPR relief means you don’t have to pay Capital Gains Tax on the increase in value of your main home for the time you lived there. Sounds great, right? But here’s where it gets tricky.

What if you have yet always to live there?

Life happens. You may have had to work abroad for a while, or you own more than one property. The good news is that you can still get some tax relief, even for periods when you weren’t living in the property. These are called ‘deemed periods of occupation’.

You can claim PPR relief for:

• Any time you’re working outside the UK
• Up to three years when you can’t live in your home because of your job
• Any absences of up to three years in total
• The last nine months you owned the property (or 36 months in some cases)

But there’s a catch! For the first three situations, you should have actually lived in the property as your main home before and after your absence.

What if you own more than one home?

If you’re lucky enough to have more than one property, you can choose which one is your ‘main residence‘ for tax purposes. But you need to tell HMRC within two years of getting the second property. If you don’t, they’ll decide based on facts like where you spend most of your time or where you’re registered with a doctor.

Married or in a civil partnership?

If you’re married or in a civil partnership, you can only have one main residence between you. But if one of you has to work away, the other can claim the same tax relief.

Were you renting out your property?

If you’ve rented out part of your main home, you might still get some tax relief called ‘lettings relief’. However, since April 2020, this only applies if you were living on the property at the same time as your tenant.

PPR relief can save you much money when you sell your home. But the rules can be complicated, especially if you’ve moved around a lot or own more than one property. If you need more clarification, it’s always best to get advice from a tax consultant. They can help you navigate the rules and make sure you’re not paying more tax than you need to. Remember, when it comes to tax, it’s not just about where you live but also about keeping good records and understanding the rules. A little knowledge can go a long way in saving you money when it’s time to sell your home!