Principal private residence relief - what it means

Siobhan McCreesh

QUESTION: I'm currently selling a property that I previously lived in. The sale was due to complete in March but due to Covid-19, the process was delayed and the completion date is now expected to be in October. Can you explain principal private residence relief?

ANSWER: The sale of a property is subject to capital gains tax. However, if the property was occupied as your main home during the period of ownership, Principal Private Residence Relief (PPR) would be available.

PPR relief reduces an individual’s taxable gain on the disposal of their main home providing the individual occupied the property for the entire period of ownership (there are some deemed periods of occupation) and was UK resident in the year of disposal.

Where an individual has not occupied the property for the entire period of ownership, a capital gain could crystallise on the gain relating to the period of non-occupation. However, is important to note that some periods of absence could be deemed to be a period of occupation.

A deemed period of occupation could arise, if by reason of employment, an individual couldn’t occupy the property. This would only apply if they lived in the property pre and post the following employment related absences, a period that the individual didn’t occupy their residence due to being abroad by reason of their employment (no time restriction) or if their employer required them to reside elsewhere, as a requirement, to do their job effectively (four-year restriction).

There would also be a deemed period of occupation for any other period of absence (up to a maximum of three years) providing the owner lived in the property pre and post the period of absence.

In addition to these, the last nine months of ownership would qualify for PPR and relief would also be available for the first two years of home ownership, providing the home was being built or renovated or you could not sell your own home and you lived in the property as your main residence within two years of owning it. There are some exceptions to the 9 month rule. This rule does not apply to individuals who have a disability or individuals who are resident in a care home. In these specific circumstances, the last 36 months of ownership qualifies for PPR relief.

As a result of the Covid pandemic, since March, how we work has changed with employees working from home and some may continue to do so for the foreseeable future. In order to claim PPR, the property must have been occupied as a residence.

Therefore, PPR could be restricted, if any part of the property was used exclusively for the purposes of a trade, business, profession or vocation, then PPR. It is important to note that any room that has a mixed use and not exclusively used for businesses purposes could still be covered by PPR. However, if a deduction has been claimed for working from home, this could have an impact on any claim for PPR.

During the Covid pandemic, travel restrictions were also implemented which restricted the movement of people. This could impact on the residency status for some individuals. In order to claim PPR, the individual disposing of the property must by UK resident. Therefore, some individuals may not satisfy the UK residency test and would not be eligible to claim PPR on any disposal of UK property.

Prior to April 6 this year, the final period of ownership that qualified for PPR was 18 months. As a result, some home owners who may have had property sales delayed due to the Covid-19 pandemic, which are now taking place in the 2021 tax year, could face a tax liability that they may not be aware of due to the reduction in the last period of ownership from 18 months to nine months.

It is important that any individual disposing of a property, should review, the specific facts in respect to the disposal, assess if Covid-19 could impact on the disposal and calculate the associated gain to ensure no hidden Covid tax cost.

Siobhan McCreesh ( is associate tax director at PKF-FPM Accountants ( The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

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