CGT and Shared Ownership — When Does Staircasing Trigger a Tax Charge?

What Is Shared Ownership?

Shared Ownership is a government-backed scheme allowing buyers to purchase a percentage share (typically between 10% and 75%) of a property and pay rent on the remaining share held by a housing association. Over time, buyers can "staircase" — purchase additional shares — until they own 100% of the property.

From April 2021, new Shared Ownership homes follow updated rules requiring housing associations to accept staircasing in 1% increments (where applicable) and making it easier to reach full ownership.

Is Staircasing to 100% a CGT Event?

This is one of the most common questions from Shared Ownership buyers, and the answer is nuanced.

**Staircasing below 100%** (e.g. buying additional 10% or 25% tranches while still paying rent on the remainder) is generally treated as a part-disposal of an asset — specifically, each additional tranche is a new acquisition, not a disposal. You are not selling anything; you are buying more. No CGT arises.

**Staircasing to 100%** is treated similarly — it is the acquisition of the final share, completing your full ownership. HMRC treats this as an acquisition event, not a disposal. No CGT arises at this point.

**CGT arises when you sell** the property after having staircased to 100% (or when you sell your share at any percentage). At that point, you are making a disposal and CGT rules apply.

How Is the Base Cost Calculated for CGT Purposes?

This is where it becomes important to keep full records. When you eventually sell, your base cost for CGT purposes is the **aggregate of all amounts paid** to acquire your cumulative ownership, including:

• The initial purchase price for your first share
• SDLT paid at each staircasing transaction
• Legal fees at each purchase tranche
• Any capital improvement expenditure during your ownership

**Example:** You initially purchased a 40% share in 2018 for £80,000. You staircased to 70% in 2021 for a further £55,000. You staircased to 100% in 2023 for a further £70,000. You sell the property in 2026 for £390,000.

• Total base cost: £80,000 + £55,000 + £70,000 = £205,000 (plus any associated costs)
• Gain: £390,000 − £205,000 − disposal costs

Does PRR Apply?

Yes — PRR applies in the same way as for any other main residence. If the Shared Ownership property has been your only or main home throughout your period of ownership, the gain on sale is fully exempt. If you have let it out or been absent without a qualifying deemed occupation period, only part of the gain will be exempt.

The period of ownership for PRR purposes runs from the date of your initial share purchase, not the date you reached 100%. This is important: if the property has been your main home the whole time — including during all staircasing transactions — you will have qualifying occupation for the full period.

What If You Sell Before Reaching 100%?

If you sell your Shared Ownership share (at whatever percentage you hold) without having staircased to 100%, you are making a part-disposal of a chargeable asset. CGT rules apply. However, if the property has been your main home throughout, PRR will exempt the full gain in the ordinary way.

The housing association typically has a right of first refusal in this scenario, meaning the resale process is managed through them rather than the open market.

The Lease Extension Question

Many Shared Ownership properties are held on long leases. Extending a lease below 80 years remaining is a capital transaction, and the premium paid may affect your CGT base cost calculation. If you have extended your lease, ensure the premium is included in your allowable acquisition costs.

Use Our Calculator

Use our [Capital Gains Tax Calculator](/capital-gains-tax-calculator) to estimate your CGT position when selling a Shared Ownership property. Enter your aggregate base cost across all staircasing transactions and your sale price to model your potential liability.