Jennifer Adams warns of possible ways in which principal private residence relief claims might sometimes be incorrect.
For most individuals selling their main home, the expectation is that any capital gains will be largely or fully tax-exempt because of principal private residence (PPR) relief.
However, tax cases have demonstrated the potential for costly mistakes, with incorrect claims leading to substantial capital gains tax (CGT) bills.
To qualify for a PPR relief claim, two conditions need to be fulfilled:
1. The property must not have been purchased solely for the purpose of making a profit.
2. It must be the individual's only or main residence throughout the period of ownership.
Periods of absence from the property may be permitted, depending on the circumstances.
