Private Residence Relief – Letting out a property that was previously your own home

If you’re moving out of the home and looking to rent it out, there are several ways you might be able to claim tax relief for your home. One of these ways is through Private Residence Relief. This can help reduce any capital gains tax (CGT) you pay on its subsequent sale.

At Alexander & Co, we have a team of expert property tax advisors and accountants, so make sure to get in touch. Keep reading on to learn more about Private Residence Relief and or capital gains tax services.

Private Residence Relief (PRR)

Currently, when you rent out a property that was once your main residence, Private Residence Relief is available for the amount of time you lived in it. Additionally, the final nine months is also disregarded. This is regardless of whether you lived in the property during this period or not, even if it was rented out during this period.

This means that, if the value of your property has increased since you purchased it, you only pay capital gains on the remainder of the time. This is calculated a percentage of the increase in value, less any tax allowable purchase and disposal costs (such as stamp duty, conveyancing fees and legal fees).

How to qualify for Private Residence Relief 

There are several conditions described on the HMRC website. These outline the circumstances in which you might be able to qualify for Private Residence Relief. These conditions are:

• The dwelling house has been your only or main residence for part of the period of ownership
• The garden or grounds, including the buildings on them, are not greater than the permitted area

One of the best ways you find out if you do quality for relief is by contacting our property tax accountancy advisors. 

How to calculate Private Residence Relief

There are several Private Residence Relief calculators available online. However, we would against these as they can be misleading and very inaccurate. The process is extremely complicated and the Government’s advice is very particular. 

You don’t want to accidentally claim this relief on your return when you are not entitled. Your best option is to take professional advice and speak to a qualified advisor.

What is Lettings Relief?

Lettings Relief, which can be up to £40,000 per person per property, was largely withdrawn in April 2020. 

Lettings Relief will only be available where the owner of the property is in shared accommodation with a tenant and can only be claimed against capital gains in this circumstance.

How Alexander & Co can help

At Alexander & Co, our specialist property team can provide expert advice on all aspects of property accountancy and tax. We have knowledge and expertise in a wide range of property areas. We have worked with companies, entrepreneurs, individuals, trusts and organisations in the commercial and residential sectors for many years. Explore our different sectors to learn more about our work in these areas.

Our property experts have specialist skills in advising businesses and individuals. We can deliver commercial and practical solutions to minimise your capital gains tax with Private Residence Relief. For more information, you can email info@alexander.co.uk. Alternatively, fill out the form below and we’ll be in touch shortly.