Working From Home: Don’t Lose Private Residence Relief!

17/06/2010

By Tax Insider

Working from home is increasingly popular, but could it affect your Capital Gains Tax (CGT) private residence relief when you come to sell?

Private residence relief is perhaps one of the best well-known tax reliefs allowing a person to sell his or her (main) home without triggering a liability to CGT. As with most reliefs, its availability is contingent on certain conditions being met.

The relief applies to the disposal of a person’s main residence. As the MPs’ expenses scandal highlighted, where a person has more than one residence, he or she can choose which one is the main...

...residence for the purposes of the relief. This does not have to be the one in which most time is spent and a person can chop and change which property is regarded as his or her main residence, although only one property can be the `main’ residence at any one time.

Relief is provided from CGT on the disposal of all or part of a property that is, or has at any time in taxpayer’s ownership, been his or her only or main residence, together with land enjoyed with the property as a garden up to the permitted area.


No Relief for Exclusive Business Use

Private residence relief is not available in respect of any part of the property that is used exclusively for business use. The key word here is exclusively and relief is only denied in respect of that part of the property that is used exclusively for business use. Where there is exclusive business use, any gain arising on the sale of the property must be apportioned and the proportion relating to exclusive business is charged to tax.


Example

Julia runs a marketing business from home. Her home has eight rooms and she uses one exclusively as... continued on page two >

 

 

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