Letting out a property that was previously your own home? Learn about Private Residence Relief

If you’re moving out of the home you once resided in and you’re 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, which has an additional grace period of the last 9 months so you don’t have to pay capital gains tax (CPT).

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 how we can help.

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, together with a 9 month grace period up to when you sold it, 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, as 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, which outlines 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 fro 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 speaking to our property tax accountancy advisors. They will be happy to help you and advise on whether you qualify for Private Residence Relief.

How to calculate Private Residence Relief

There are several Private Residence Relief calculators available online that show you whether or not you might be eligible for this relief, so you can keep your capital gains. However, we would recommend staying clear of these kinds of tools since 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, so your best option is to speak to a qualified advisor. Get in touch with us today.

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.

It is often a difficult decision as to when it is the right time to dispose of an investment property, particularly as there may be other complex tax issues that need to be considered.

letting out your own home

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 investments and 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 and can deliver commercial and practical solutions to maximise your returns with Private Residence Relief. Our skills range from help with selling and developing your portfolio to more complex arrangements. For more information, you can email info@alexander.co.uk or call us on 0161 832 4841. Alternatively, fill out the form below and we’ll be in touch shortly.

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