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Finance Act 2014

Section 58: Relief on Disposal of Private Residence


1.This section reduces, in most cases, the period for which an only or main residence qualifies automatically for final period exemption from 36 months to 18 months. The exception to this change applies to individuals who are disabled or in a care home and with no other property on which they can claim private residence relief, who will continue to get the 36 month final period exemption.

Details of the Section

2.Subsection (1) provides that the Taxation of Chargeable Gains Act 1992         (TCGA 1992) shall be amended in accordance with the section.

3.Subsection (2) amends section 223 of TCGA 1992, which provides for the amount of relief from capital gains tax that is available when an individual disposes of an interest in a private residence (a dwelling-house that is, or has at any time in their ownership been, their only or main residence). It reduces the length of the final period of ownership that is always eligible for relief from 36 months to 18 months; removes the ability to amend that period by Treasury order; and makes section 223 subject to a new relief introduced at section 225E.

4.Subsection (3) inserts new section 225E into TCGA 1992.

5.New section 225E provides for a new relief on disposal of a private residence for an individual who is a disabled person or living in a care home at the time of the disposal; enabling them to retain a final period exemption of 36 months. In order to qualify the individual must not have any other residential property on which they can claim private residence relief.

6.New subsection 225E(3) extends relief to the spouse or civil partner of the individual mentioned above.

7.New subsection 225E(7) provides that where the property is held in trust, private residence relief can be given to the trustees for the final 36 months of ownership where the individual occupying the property meets the conditions in section 225E (2) to (6).

Background Note

8.The final period exemption allows people 18 months to sell a previous only or main residence after moving to a new one without losing private residence relief for the property they are no longer living in.

9.The final period was reduced from 36 months to 18 months as the longer period was being exploited by individuals with more than one property.

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