When it comes to selling your main residence, the tax relief known as Principal Private Residence Relief (PPRR) can significantly reduce or eliminate the Capital Gains Tax (CGT) you owe. Understanding how permitted absences affect this relief can help you maximize your savings. Hereβs how you can make the most of it:
What is Main Residence Relief?
Principal Private Residence Relief (PPRR) is a tax relief that exempts you from paying Capital Gains Tax (CGT) on the sale of your main home. This relief applies to the gain you make when selling the property, but certain conditions must be met to qualify.
Permitted Absences Explained
Permitted absences are periods when you are away from your main residence but still maintain it as your home. These absences can be crucial for maximizing your PPRR. Hereβs how:
- Absences Due to Employment
If youβre away from your main residence due to employment, the period of absence is generally treated as if you were living in the property. This includes periods spent working abroad or away from home.
- Absences for Personal Reasons
Permitted absences also include times youβre away for personal reasons, such as illness or caring for a family member. These periods can be counted towards the relief period, even if they extend beyond the normal occupation.
- Up to 9 Months of Permitted Absence
For any period of absence, up to 9 months is automatically considered as part of the main residence period for PPRR purposes. This can be especially beneficial if you are temporarily away for reasons not related to work.
- Final Period Exemption
Regardless of the total period of absence, the final 9 months of ownership are automatically covered by PPRR. This means even if you werenβt living in the property during this time, itβs still exempt from CGT.
How to Make the Most of Permitted Absences
- Keep Detailed Records
Maintain accurate records of all periods of absence, including reasons and durations. This documentation will be crucial in demonstrating your entitlement to PPRR if required.
- Ensure Continuous Ownership
Even during periods of absence, ensure the property remains in your ownership and that you donβt rent it out. Renting out the property can affect your eligibility for PPRR.
- Consult a Tax Professional
Tax regulations can be complex, and itβs wise to consult a tax advisor to ensure you fully understand how permitted absences apply to your situation and to optimize your PPRR claim.
For more information on permitted absences and how they affect Principal Private Residence Relief, visit the HMRC Capital Gains Tax on Property page.
For HelpΒ with Topic above or any Accountancy help β contact us:Β