CG64977 - Private residence relief: computation of relief: general rule
At its simplest, the amount of relief available is computed by
dividing the period in which the property was used as its owners
only or main residence, together with the final 36 months, by the
total period of ownership.
An individual acquires a dwelling house in January 1983 for
£25,000. It is his only or main residence from January 1983 to
January 1987. The dwelling house is sold in January 1993 for
£100,000.
The gain before relief is
| £ | |||||
| Disposal proceeds | 100,000 | ||||
| less | Cost | 25,000 | |||
|
Unindexed gain | 75,000 | ||||
| less | Indexation | 25,000 | x | 0.669 | 16,725 |
|
Net gain | 58,275 | ||||
PRIVATE RESIDENCE RELIEF
Period of ownership January 1983 - January 1993 = 120 months
Period of only or main residence
January 1983 - January 1987 = 48 months
Final period allowed by TCGA92/S223 (2) = 36 months
| The relief is | 48 + 36 | x 58,275 = £40,793 |
| 120 |
The chargeable gain will be £17,482 before annual exempt
amount.
NOTE. If a taxpayer is within the charge to Capital Gains
Tax, neither indexation allowance nor taper relief apply to
disposals of assets on or after 6 April 2008. Previously indexation
allowance had been frozen at April 1998. For indexation allowance
see CG17207+ and for taper relief see CG17895+.
The effect of the relief is to determine how much, if any,
of the gain computed in the usual way and arising on the disposal
of the residence is a chargeable gain. Therefore the relief is
given after indexation allowance.
NOTE. If a taxpayer is within the charge to Capital Gains
Tax, neither indexation allowance nor taper relief apply to
disposals of assets on or after 6 April 2008. Previously indexation
allowance had been frozen at April 1998. For indexation allowance
see CG17207+ and for taper relief see CG17895+.
