Private Residence Relief Explained: How to Avoid CGT on Your Main Home

What Private Residence Relief is

Private Residence Relief (PRR) is the rule that exempts you from paying Capital Gains Tax (CGT) on the sale of your main home. It is the most valuable tax relief most homeowners ever use. For a typical owner-occupier who buys a home, lives in it, and sells it years later for a profit, PRR means there is no tax to pay on the gain, even if the gain is in the hundreds of thousands.

Without PRR, almost everyone selling a home in 2026 would face a CGT bill. PRR is what makes the UK property market work the way it does for owner-occupiers.

When full PRR applies

You get full PRR (zero CGT on the entire gain) if all the following are true:

1. The property has been your only or main residence throughout your period of ownership

2. The property has not been used for any non-residential purpose (e.g. business)

3. The garden and grounds do not exceed 0.5 hectares (or larger if reasonably required for the enjoyment of the home)

4. You have not been absent for periods that fail to qualify under the rules below

The "throughout the period of ownership" requirement is strict. Any period during which the property was not your main home reduces the relief.

The final period exemption

The last 9 months of ownership are always treated as if you lived in the property, even if you actually moved out earlier. This is called the final period exemption. It exists so that homeowners are not penalised for moving out before the sale completes.

For homeowners with disability or care home moves, the final period exemption is extended to 36 months.

Periods of absence that still qualify

Certain periods of absence are still treated as occupation for PRR purposes. The main categories are:

1. Up to 3 years for any reason, provided the property was your main home before and after the absence

2. Any period of work outside the UK (no time limit)

3. Up to 4 years if your work in the UK requires you to live elsewhere in the UK or abroad

4. The first 12 months after purchase, even if you could not move in immediately (extended to 24 months in some cases)

These reliefs allow homeowners to retain PRR through reasonable life events such as a temporary work secondment.

Partial PRR

If the property has been your main home for part of the ownership period but not all of it, you get partial PRR. The relief is calculated as:

• Taxable gain = Total gain × (Period of non-occupation ÷ Total period of ownership)

Worked example:

• Bought in 2014, lived in until 2020 (6 years, main home)
• Let out from 2020 to 2026 (6 years, not main home)
• Final 9 months (April 2025 to January 2026) automatically count as occupation
• Total ownership: 12 years
• Qualifying period: 6 years (lived in) + 9 months (final period) = 6.75 years
• Non-qualifying period: 12 - 6.75 = 5.25 years
• Gain on sale: £200,000
• Taxable portion: £200,000 × (5.25 / 12) = £87,500

The £87,500 would then have the annual CGT allowance applied (£3,000) and the higher rate would apply (24% for higher-rate taxpayers).

Letting Relief

Letting Relief is a separate relief that historically reduced the taxable portion further when the property had been let during ownership. From 6 April 2020, Letting Relief was significantly restricted and now only applies where the owner was in shared occupation with the tenant. Pure buy-to-let with no shared occupation does not get Letting Relief in 2026.

Multiple homes

If you own two homes you can elect which is your main residence by writing to HMRC within 2 years of acquiring the second home. The election can be varied later. This is a useful planning tool for second home owners and for couples who marry while owning separate properties.

Without an election, HMRC determines the main residence based on the facts (where you actually live, where the family is based, where bills go, where you are registered to vote).

Common pitfalls

1. Letting a room in your home: shared occupation does not affect PRR (under the rent-a-room scheme), but letting an entire flat above your main home does.

2. Working from home: using a room exclusively for business can reduce PRR, although limited home working as part of normal employment does not.

3. Garden over 0.5 hectares: properties with large gardens or paddocks may have a partial restriction.

4. Holiday lets (FHL): a furnished holiday let is not a main residence regardless of the time you spend there.

5. Job-related accommodation: if you live in employer-provided accommodation, your other home may still qualify as main residence.

Get the dates and facts right

To calculate PRR you need the dates of purchase, occupation, absence, and sale. You also need the original purchase price and any allowable deductions. The full HM Land Registry sold price history for every property in England and Wales is shown on Property Passport UK at [/search](/search), which is the easiest way to verify dates and prices.

For complex situations involving multiple homes, marriage, divorce, or business use, get specialist tax advice before you sell.

Look up the property data behind your tax decisions

Property Passport UK shows verified data for every one of the 19.35 million properties in England and Wales: tenure, EPC, sold prices, flood risk, listed status. Use it to research before you buy a second home, plan a sale, or work out a tax position. Search any address at [/search](/search). Every fact comes from an official UK government source.

Related guides

• Stamp duty second home explained
• CGT on second home UK
• Private residence relief explained
• Inheritance tax on property