What is Private Residence Relief?
Private Residence Relief can reduce or remove Capital Gains Tax on a home that has been your main residence. If a rental property was once your home, part of the gain may qualify, including the final nine months of ownership. Your accountant will confirm what applies.
Read more in our guide: Capital Gains Tax when selling rental property
Key facts at a glance
| Item | Detail |
|---|---|
| Periods you lived in the property as your main home | Exempt |
| Final period of ownership | Final 9 months always exempt if it was your main home at some point (36 months if you are disabled or moving into care) |
| Absence for any reason | Up to 3 years can count as occupation, if you lived there before and after |
| Absence working elsewhere in the UK | Up to 4 years can count, with conditions |
| Absence working abroad | Any length of time can count, with conditions |
| Lettings relief | Only if you shared the home with your tenant; up to £40,000 |
| Two homes at once | You can nominate which is your main residence within 2 years of the change |
How Private Residence Relief Works
Private Residence Relief (PRR) means no Capital Gains Tax is due on the gain from selling your only or main home, as long as you lived in it throughout your ownership and the grounds are under 5,000 square metres (about 0.5 hectares). For landlords it matters mostly in one situation: a rental property that was once your home. The gain is then split, with the part relating to periods of residence (plus certain deemed periods) exempt and the rest taxable.
A Worked Example: A Former Home Now Let
A landlord bought a flat in April 2010, lived in it for four years, then let it from April 2014 until selling in April 2026, a total of 16 years (192 months). The gain is £120,000.
| Months lived in the flat | 48 |
| Final period relief | 9 |
| Exempt months | 57 of 192 (29.7%) |
| PRR | £35,625 |
| Lettings relief (tenant did not share the home) | £0 |
| Chargeable gain before the annual exempt amount | £84,375 |
Before April 2020 the final period was 18 months and lettings relief of up to £40,000 was widely available, so many landlords who did their own sums years ago are now facing a larger bill than they expected.
Rules That Catch Landlords Out
- It must be a genuine residence. A short stay to try to qualify does not count; HMRC looks at the quality of occupation, such as where you were registered and where your post went.
- Married couples and civil partners can only have one main residence between them at any time.
- Nomination. If you have two homes, you can nominate one within two years of starting to have both. Without a nomination, it is decided on the facts.
- Part of the property used for business, or a separately let annex, can restrict the relief.
- Bought to resell or develop. Relief can be denied if the property was bought mainly to make a gain.
Private Residence Relief and Portfolio Sales
Some portfolios include the landlord's first home, or a property a family member once lived in. Identify these before you sell, because they may carry a lower tax bill and can change which properties are sold in which tax year in a phased sale. A former home that is partly exempt still needs a 60-day report if any tax is due. Properties held in a company or most trusts do not qualify.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
Private Residence Relief can reduce or remove Capital Gains Tax on a home that has been your main residence. If a rental property was once your home, part of the gain may qualify, including the final nine months of ownership. Your accountant will confirm what applies.
Usually you pay CGT on part of the gain. The share relating to the time you lived there, plus the final nine months of ownership, is normally exempt under Private Residence Relief.
Only where you lived in the property at the same time as your tenant. Since 6 April 2020 it no longer applies to a former home let out after you moved out.
The final nine months of ownership are exempt if the property was your main home at some point. It is 36 months if you are disabled or moving into long-term care and meet the conditions.
No. Spouses and civil partners living together can only have one main residence between them for Private Residence Relief at any time.
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