CG64605 - Private residence relief: gains: options

Options and the treatment of options are described at CG12300+.

If a person grants an option to purchase all or part of their residence the treatment of the consideration received for the grant of the option depends on whether that option is exercised or not.

Unless the option is exercised the grant of the option is treated as a disposal of an asset, namely the option, TCGA92/S144 (1). Private residence relief should be given to the same extent as relief would have been given on a disposal of the residence, or the part of it subject to the option, if it had taken place on the same date as the option was granted.

If the option is exercised the grant of the option and its exercise are treated as a single transaction, Section 144(2). So the consideration received for the grant of the option is added to the consideration received for the exercise of the option. The residence, or part of it, is disposed of and private residence relief will be due if the other conditions for relief are met.