CG64985 - Private residence relief: final period exemption

TCGA92/S223 (1), (2), (5) & (6)

If a dwelling house has been used as its owner’s only or main residence at some time in his or her period of ownership then the following final part of the period of ownership will always qualify for relief.

• For disposals before 6 April 1980, 12 months, with a discretion in certain circumstances to extend the period to 24 months.
• For disposals after 5 April 1980 but before 19 March 1991, 24 months.
• For disposals on or after 19 March 1991 but before 10 December 2003, 36 months.
• For disposals on or after 10 December 2003, where the acquisition cost of the dwelling house is unaffected by gift hold-over relief under TCGA92/S260, 36 months.
• For disposals on or after 10 December 2003, where the acquisition cost of the dwelling house is reduced by gift hold-over relief under TCGA92/S260, only that part of the final 36 months of ownership falling before 10 December 2003 (see example in CG64935).

The purpose of the final period exemption is to help the owner occupier who puts his or her house up for sale but cannot find a buyer. The downturn in the housing market prompted the increase to 36 months for disposals after 19 March 1991 but TCGA92/S223 (5) gives the Treasury a power to vary this period to 24 months for disposals after a specified date by an order in Parliament. A further order can then restore the final period to 36 months. The intention is to allow flexibility to deal with fluctuations in the housing market. So far the period has not been varied from 36 months.

The exemption applies in any event

Although the final period exemption is intended to apply where there are difficulties finding a buyer, it applies ‘in any event’, TCGA92/S 223 (2). So exemption will always be available for the final period if the dwelling house has been its owners only or main residence, regardless of the use of the dwelling house in that final period. But see CG64985 for the definition of the final period particularly in relation to disposals on or after 10 December 2003.

Part of the dwelling place

If only part of the dwelling house has been used as its owners only or main residence, only that part will qualify for the final period exemption. Any part of the dwelling house which has been used as part of the owners only or main residence at some time in their period of ownership will qualify for the exemption. The only part which will not qualify is any part which has never been part of the owners only or main residence.