Glossary · UK
What is Principal Private Residence Relief (PPR)?
A Capital Gains Tax exemption for gains made on selling your main home. If you lived in the property as your main home for the entire ownership period, the full gain is exempt. The final 9 months of ownership always qualify, even if you moved out.
Full Definition
Principal Private Residence Relief (PPR) exempts from Capital Gains Tax (CGT) any gain arising on the disposal of a property that has been an individual's only or main residence throughout the period of ownership. If the property has been the owner's main home for the entire period, 100% of the gain is exempt. Where the property was only the main home for part of the ownership period, only a proportionate fraction of the gain is exempt, calculated as: (months as main residence + final exempt period) divided by total months of ownership. The final period exemption is currently 9 months (reduced from 36 months before April 2014 and from 18 months between 2014 and 2020). This means that even if the owner moved out up to 9 months before selling, that final period still counts as a period of deemed residence. Lettings relief, which previously provided additional relief of up to £40,000 per owner on the let portion, was largely abolished from April 2020 — it now only applies where the owner lived in the property at the same time as the tenant (shared occupancy). Owners with more than one property can nominate which is their main residence within two years of acquiring the second property; this election can be valuable for minimising CGT. The garden and grounds of up to 0.5 hectares are included within the relief automatically; larger grounds may qualify if required for the reasonable enjoyment of the house. Periods of absence for work reasons or for any reason up to three years may also count as deemed residence if the owner occupies the property before and after.