CG64470 - Only or main residence: ownership is a requirement

Ownership is a requirement for a dwelling house to be a residence. Relief is given under Section 222(1) on the disposal of, or of an interest in, a dwelling house or part of a dwelling house. References to a residence in Section 222 should be interpreted accordingly. This means, for example, that in determining which of an individuals residences is the main residence, see CG64485+, it is only necessary to consider residences in which that individual has an interest. What is meant by an interest in a residence is explained below.

An interest in a dwelling house means a legal or equitable interest. It includes all possible forms of ownership from owning the freehold, to being a co-owner of a minimal tenancy. In most cases in which a residence is rented a tenancy exists, and such residences therefore remain within Section 222.

The only circumstance in which an individual can reside in a property in which he has no legal or equitable interest is under licence. A licence is a permission to reside in a property which may be contractual or gratuitous. Examples of residence under contractual licence are staying in a hotel or lodgings. An example of residence under gratuitous licence is staying with family or friends.

Where an individuals main home is occupied under licence, but he has another residence which is owned, the residence which is owned is the only or main residence within Section 222 and relief is due accordingly.

Whether or not a property is a residence within Section 222 may become important if the individual has one or more other residences because, subject to ESC/D21 which is explained at CG64500-CG64503 below, a notice may be needed nominating which residence is to be regarded as the main residence, see CG64485+ below. The individual can then ensure that the residence which is regarded as his or her main residence is the one on the disposal of which a gain is more likely to accrue.