Private Residence ‘Deemed Residence Period’ Reduced

The UK tax system has traditionally exempted any profit on the sale of a person’s principal private residence (PPR) from Capital Gains Tax (CGT). The exemption applies to make any gain accruing during periods of use as a PPR exempt from charge.



A property which has been used as the actual PPR for part of the period of ownership, but not all, may therefore attract a charge to CGT.



One valuable relief is that the last three years of ownership of a property have been deemed to be a period of actual residence whether or not the owner(s) actually resided there.



With the logjam in the property sales market now clearing, the Chancellor of the Exchequer sprung a surprise in his recent Autumn Statement by reducing the ‘deemed actual residence’ period to 18 months for sales which take place after 5 April 2015.