Main Residence Nomination — Which of Your Two Homes Is Exempt From CGT?

The Problem: Two Homes, One Exemption

Private Residence Relief (PRR) exempts the gain on your main home from Capital Gains Tax. But if you own two or more residential properties at the same time, only one can be your "main" or "principal" private residence for PRR purposes at any given moment.

If you do nothing, HMRC will determine which property was your main residence based on the facts — principally, where you actually spent most of your time, where you were registered to vote, which address your bank and doctor hold, and so on. This determination is retrospective and can be disputed, but it is uncertain.

Alternatively, you can take control by making a formal **main residence nomination** (also referred to as a "section 222(5) election").

The Two-Year Window

When you first come to own two or more residential properties simultaneously — for example, you purchase a second home or holiday cottage while still owning your first — you have **two years** from the date on which the combination of properties first arises to make your election.

If you fail to elect within two years, HMRC will revert to determining the matter on the facts for the period before any subsequent election is made. You can still make an election after the two-year window, but it will only affect the period from the date of the new election onwards — the period before it remains subject to factual determination.

How to Make the Election

The election is made by written notice to HMRC. There is no prescribed form; a signed letter is sufficient. The letter must:

• Identify both (or all) properties
• State which property you nominate as your main residence
• Be signed by both spouses or civil partners if the property is jointly owned
• Be submitted to your local HMRC office (or, in practice, your Self Assessment office) within the two-year window

HMRC's guidance states the letter should include:

• Your full name and National Insurance number
• The address of each property
• The date from which the nomination takes effect
• Which property you are nominating

There is no official template. Your tax adviser can draft the letter if required.

Can You Change the Nomination?

Yes. Once an election is in place, you can change it at any time. Each time you change it, the new nomination takes effect from the date of the new notice (though it cannot be backdated further than it is reasonable to infer was intended). The key is that you must have had **some degree of occupation** at the property you are nominating — you cannot nominate a property you have never visited.

Why This Is Strategically Powerful

The ability to switch nominations allows you to maximise the PRR exempt period for each property over time, in turn minimising CGT.

**Classic example:** You own your main home and purchase a holiday cottage. You nominate the holiday cottage as your main residence for one to two months before switching back to your main home. This brief period of nomination means the holiday cottage gets the benefit of the **final nine months rule** when you come to sell it — those nine months are treated as a qualifying period (main residence at some point during ownership), saving CGT on the gain accruing during that period.

This technique is well-known and entirely legal. HMRC is aware of it and it continues to be available. For a higher rate taxpayer, the final nine months' worth of gain being exempt could represent a saving of many thousands of pounds.

Worked Example

You own your main home (currently worth £600,000) and a cottage (currently worth £250,000). You nominate the cottage as your main residence for 60 days, then switch back to your main home. When you later sell the cottage:

• Total ownership period: 10 years (120 months)
• Qualifying period from 60-day nomination: 2 months + 9 months final period = 11 months
• Non-qualifying period: 109 months
• PRR fraction for cottage: 11/120 = 9.2%
• Gain exempt via PRR: 9.2% of gain
• Additional saving compared to no election: up to 9 months of gain exempt that would otherwise have been fully chargeable

Without any nomination, only factual occupation periods count. If you rarely stayed at the cottage, factual occupation might be minimal or contested.

Use Our Calculator

Use our [Capital Gains Tax Calculator](/capital-gains-tax-calculator) to model the impact of a main residence nomination on your expected CGT liability when selling a second property. Changing the qualifying period inputs allows you to compare outcomes clearly.