Skip to content 
If you’ve lived in a property as your main residence, certain periods of absence may still qualify for Private Residence Relief (PRR), helping reduce your capital gains tax (CGT) bill. With the right planning, you can take advantage of these rules by moving back into your former home before selling it.
Three-Year Absence Rule
One helpful rule allows up to three years of absence for any reason to count as a period of residence, provided the property was your main home before and after the absence. This means moving back into a home before selling it can eliminate or reduce the taxable gain.
Example 1: Karen bought a flat in January 2014 for £150,000 and lived there until March 2022. She then bought another house but kept the flat and rented it out. In 2024, Karen sold her house and moved back into the flat in June. She sold the flat in October 2024 for £400,000, realizing a gain of £250,000.
Karen’s flat was her main home from January 2014 to March 2022. Her two years and three months of absence are within the three-year allowance, and because she lived in the flat again before selling, PRR applies to the entire gain. She pays no CGT.
Example 2: Harry bought a flat in January 2018, lived there for three years, then moved into a house with his girlfriend and rented out the flat. He sold the flat in October 2024, making a gain of £200,000.
Harry owned the flat for 81 months but lived in it as his main home for 36 months. The last nine months of ownership also qualify for PRR. This means 45 months (36 + 9) are eligible for relief, sheltering £111,111 of the gain. The remaining £88,889 is taxable, subject to exemptions. If Harry had moved back into the flat before selling, the entire gain could have been exempt.
Timing Is Key
Careful planning can extend your exempt gain. If you’ve lived in the property as your main home before, the final nine months of ownership always qualify for PRR. This means you can move back, live there for a brief period, and still move out again for up to nine months before selling. This strategy could allow up to three years and nine months of absence while still benefiting from relief.
Frequently asked questions (FAQs) Maximize PRR
1. What is Private Residence Relief (PRR)?
PRR is a tax exemption that reduces or eliminates CGT when you sell a property that has been your main home. Certain periods of absence, such as up to three years for any reason, can still qualify if the property was your main home before and after the absence. This can significantly reduce your tax liability when selling.
2. Do I have to live in the property again before selling to claim PRR?
To benefit from the three-year absence rule, you need to live in the property as your main home before you sell it. If you move back in, your absence will be surrounded by times when you lived there, which makes the whole period eligible for relief. Pay attention to the timing of your return and the sale to make the most of this relief.
3. Can PRR apply to a rental property?
Yes, PRR can apply to a property you’ve rented out if it was previously your main home. The three-year absence rule and the final nine months of ownership still qualify for relief. Moving back in before selling can help shelter more of the gain from CGT.
4. How can careful planning maximize my exempt gain?
By moving back into the property and timing the sale correctly, you can maximize your PRR. Living in the home briefly and selling within nine months of moving out again can extend the period of absence that qualifies for relief to three years and nine months. Proper planning ensures you meet all requirements and reduce or eliminate your CGT bill.