Final period of deemed occupation to reduce


Written by Ray Coman

The final nine months of ownership are a deemed period of occupation provided the property has been lived in by its owner at some stage.  The months are counted back from the date of exchange and are included as periods of occupation for the purpose of caluclating prinicpal private residence relief.  It is not necessary for the owner to occupy the property during the final period for the deeming provision to apply.   

Update: Prior to 6 April 2020 the period of absence was 18 months and the reduction was announced in the 2018 Budget.


As from 6 April 2014 the rules change affecting taxpayers who own property that was previously their home.


Each person is entitled to dispose of a property occupied as their home without suffering any capital gains tax. However, for any other property an exposure to capital gains tax arises. The tax system will allow a person to continuing to treat their former home as exempt from capital gains tax during certain periods of absence. These periods are referred to as deemed periods of occupation.


One deemed period of occupation is the final period of ownership. The final period of ownership would provide exemption from capital gains tax in the situation where a person has moved home but their pervious place is still on the market. The final period used to be 36 months, but for properties exchanged after 6 April 2014 it will reduce to 18 months.


Principal Private Residence relief can significantly reduce a person’s tax liability. The reduction in effectiveness of the relief will increase the potential tax burden on eventual disposal of a property. Please contact Coman & Co if you are concerned about the impact of the proposals on your exposure to capital gains tax.

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