Private Residence Relief (PPR): Selling Your Main Home (2026-27)

When you sell your main home in the UK, you normally don't pay Capital Gains Tax on any profit you make. This relief is called Private Residence Relief (PPR), and it's one of the most valuable tax breaks available to homeowners. PPR automatically exempts gains from the periods you actually lived in the property as your only or main residence, plus the final nine months of ownership regardless of whether you still lived there. If you've always lived in the home since you bought it, the entire gain is usually tax-free. However, if you've rented it out, used it for business, owned multiple properties, or been absent for certain periods, the calculation becomes more complex. This guide explains how PPR works in 2026-27, what counts as your main residence, how to handle periods of absence, and how to calculate any taxable gain if you don't qualify for full relief.

What is Private Residence Relief?

Private Residence Relief is a Capital Gains Tax exemption that protects the profit you make when selling your home. Without this relief, you'd potentially owe CGT at 18% or 24% (for higher-rate taxpayers) on the gain—the difference between what you paid for the property and what you sold it for.

PPR is governed by the Taxation of Chargeable Gains Act 1992, sections 222-226 [TCGA 1992 s.222-226]. The relief applies automatically when you sell a property that has been your only or main residence during your period of ownership.

The key principle is simple: the proportion of your ownership period during which the property was your main home is exempt from CGT. Any period when it wasn't your main home may be taxable (though there are important exceptions we'll cover).

How PPR Works: The Basic Calculation

PPR works by dividing your total ownership period into "exempt" and "non-exempt" periods, then applying that proportion to your overall gain.

The formula: Taxable gain = Total gain × (Non-exempt months ÷ Total months of ownership)

Example: Michael's straightforward sale

Michael bought a house in January 2020 for £250,000 and sold it in January 2027 for £350,000. He lived in it as his only home for the entire seven years (84 months). His gain is £100,000.

Because he lived there throughout, the entire 84 months qualify for PPR. His taxable gain is: £100,000 × (0 ÷ 84) = £0

Michael pays no Capital Gains Tax.

The Final Nine Months Rule

One of the most helpful aspects of PPR is the "final period exemption." The last nine months of ownership always count as exempt, even if you've moved out and the property is empty or rented [TCGA 1992 s.223(1)].

This gives homeowners breathing room to sell without losing relief—you can move to a new home before selling your old one without creating a tax bill for those months.

Example: Sarah's overlap period

Sarah bought her flat in March 2019 for £200,000. She lived there until June 2026, when she bought a new house and moved out. She sold the flat in March 2027 for £260,000 (a £60,000 gain).

Total ownership: 96 months (March 2019 to March 2027) Actual occupation: 87 months (March 2019 to June 2026) Final nine months: automatically exempt (June 2026 to March 2027)

Total exempt period: 87 + 9 = 96 months

Even though Sarah moved out nine months before selling, the entire gain is exempt. She pays no CGT.

What Counts as Your "Main Residence"?

For PPR to apply, the property must be your "only or main residence." HMRC looks at the facts: where do you actually live? Where is your family? Where are your belongings? Where do you spend most of your time?

You can only have one main residence at any given time for PPR purposes. If you own multiple properties, you need to consider which one qualifies.

The Property Itself

PPR covers the dwelling house and its garden or grounds, up to 0.5 hectares (about 1.2 acres) in total [TCGA 1992 s.222(3)]. If your garden is larger than this, you'll need to show the additional land is "required for the reasonable enjoyment of the dwelling" given its size and character—otherwise the excess may be taxable.

The relief covers the building you live in. If you have separate buildings on your land (a detached office, a guest cottage), these don't automatically qualify unless they're integral to your enjoyment of the main house.

Owning Multiple Homes: The Nomination Election

If you own two or more residences at the same time—perhaps a flat in London and a cottage in Cornwall—you can choose which one is treated as your main residence for PPR purposes. This is called a "nomination election" [TCGA 1992 s.222(5)].

You must make this election within two years of acquiring the second property. The election is made by writing to HMRC stating which property you're nominating as your main residence from which date.

Why this matters:

If you don't nominate, HMRC will decide based on the facts which property was actually your main residence. This might not be the one that's increased most in value. By nominating strategically, you can ensure PPR protects the property with the largest gain.

Example: James's two properties

James owns a flat in Manchester (bought 2020, now worth £100,000 more than he paid) and a house in the Lake District (bought 2024, now worth £40,000 more). He spends roughly equal time in both.

He nominates the Manchester flat as his main residence because it has the larger gain. When he eventually sells both, the Manchester gain will be fully exempt under PPR, while the Lake District house may have a taxable gain (though the final nine months will still be exempt).

You can change your nomination, but only with effect from the date of the change—you can't backdate it to manipulate relief.

Permitted Absences: When You Can Be Away and Still Qualify

Life isn't static. You might work abroad, move for a job, or spend time elsewhere. PPR recognises this with "deemed occupation" rules—periods when you're not physically living in the property but it still counts as your main residence [TCGA 1992 s.223(3)].

Absences That Always Count (Any Reason)

Any period of absence counts as occupation if:

• The property was your main residence at some point before the absence, AND
• The property becomes your main residence again after the absence (or would have, but for work requirements), AND
• You had no other main residence eligible for relief during the absence

There's no time limit on these absences, but both the before and after conditions must be met.

Employment-Related Absences

Two specific types of work absence qualify for deemed occupation:

1. Working elsewhere in the UK: Up to four years in total where you (or your spouse/civil partner) had to live elsewhere in the UK for work [TCGA 1992 s.223(3)(b)].

2. Working overseas: Any period where you (or your spouse/civil partner) worked abroad in employment or self-employment, with no maximum time limit [TCGA 1992 s.223(3)(a)].

These periods don't need to be consecutive. You can have multiple absences that add up.

Example: Priya's overseas posting

Priya bought a house in 2018 and lived there for two years. In 2020, her employer posted her to Singapore for five years. She returned in 2025 and lived in the house again until selling it in 2027.

Total ownership: 108 months Actual occupation: 48 months (2018-2020 and 2025-2027) Overseas employment absence: 60 months (2020-2025) – counts as deemed occupation Final nine months: included in the 2025-2027 period

Entire ownership period is exempt. No CGT due.

The Three-Year Any-Reason Absence

You can be absent for any reason for up to three years in total, provided the property was your main residence before and after (or would have been but for work requirements) [TCGA 1992 s.223(3)(c)].

This might cover extended travel, caring for a relative elsewhere, or simply living somewhere else temporarily.

Important: These deemed occupation periods only work if you don't claim PPR on another property during the absence. You can't have two main residences simultaneously.

Partial PPR: When You Don't Get Full Relief

If you've used part of your home exclusively for business, or let out part of it, or simply didn't live there for some of your ownership, you may only get partial relief.

Business Use

If you use part of your home exclusively for business (a room that's only ever an office, never used privately), that proportion of the gain won't qualify for PPR [TCGA 1992 s.224(1)].

Using your dining table for paperwork in the evenings doesn't count as exclusive business use—the room must be set aside solely for business.

Letting Part of Your Home

If you let out a room or floor while living in the rest of the property, the gain attributable to the let portion is taxable, subject to one important exception: Lettings Relief.

Lettings Relief: The 2020 Changes

Lettings Relief used to be widely available, but from April 2020 it was drastically restricted. In 2026-27, Lettings Relief only applies if you let out part of your home while you're living there in shared occupation [TCGA 1992 s.223(4)].

If you moved out entirely and let the whole property, Lettings Relief doesn't apply to that period.

Where it does apply, Lettings Relief exempts the lower of:

• The gain attributable to the let period
• The amount of PPR already given
• £40,000

Example: Tom's lodger

Tom bought a three-bedroom house for £300,000 in 2020 and sold it for £400,000 in 2027 (£100,000 gain). He lived there throughout, but let one of the three bedrooms to a lodger for the entire period.

One-third of the property was let while he lived there. One-third of £100,000 = £33,333 would normally be taxable.

Lettings Relief applies because Tom was in shared occupation. The relief is the lower of:

• £33,333 (the let portion gain)
• £66,667 (the PPR already given for the two-thirds he occupied)
• £40,000 (the maximum)

Lettings Relief: £33,333

Tom's entire gain is exempt.

Calculating Your Taxable Gain: A Worked Example

Example: Rachel's complex situation

Rachel bought a house in April 2017 for £280,000. She lived there until March 2020 (36 months), then moved abroad for work for three years until March 2023 (36 months). She returned and lived there again until March 2025 (24 months), then moved to a new house but kept the old one empty until selling it in December 2026 (21 months). Sale price: £400,000. Gain: £120,000.

Total ownership: 117 months (April 2017 to December 2026)

Exempt periods:

• April 2017 to March 2020: 36 months (actual occupation)
• March 2020 to March 2023: 36 months (overseas employment—deemed occupation)
• March 2023 to March 2025: 24 months (actual occupation)
• March 2025 to December 2026: 21 months (absent, but final 9 months are exempt)

Wait—let's recalculate the final period. Rachel moved out in March 2025 and sold in December 2026 (21 months). The final nine months (March 2026 to December 2026) are automatically exempt. The 12 months from March 2025 to March 2026 don't qualify for any deemed occupation relief because she wasn't working abroad and didn't return to live there.

Revised exempt periods:

• Actual occupation: 60 months (36 + 24)
• Overseas employment: 36 months
• Final nine months: 9 months
• Total exempt: 105 months

Non-exempt: 12 months (March 2025 to March 2026, excluding the final nine)

Taxable gain: £120,000 × (12 ÷ 117) = £12,308

Rachel would owe CGT on £12,308. After her Annual Exempt Amount (£3,000 in 2026-27), she'd pay tax on £9,308 at either 18% or 24% depending on her income tax band.

Common Mistakes

Assuming the final nine months covers any absence: The final nine months is automatic, but earlier absences need to meet specific conditions. If you moved out two years before selling and weren't working abroad or elsewhere in the UK, only the final nine months are exempt—the other 15 months may be taxable.

Not making a nomination election in time: You have two years from acquiring a second property to nominate your main residence. Miss this deadline and you lose the ability to choose strategically.

Thinking Lettings Relief still applies when you move out: Since April 2020, Lettings Relief only works if you're living in the property at the same time as your tenant. Buying a house, living there for a year, then letting it out for five years means those five years get no Lettings Relief.

Forgetting about business use: If you claimed a room as a dedicated office for tax purposes (claiming expenses, business rates), that exclusive business use means that proportion of your gain won't qualify for PPR.

Miscounting the final nine months: It's the final nine months of ownership (completion to completion), not nine months from when you moved out.

What Happens If You Owe CGT?

If your gain isn't fully covered by PPR, you'll need to:

1. Calculate your taxable gain (total gain minus exempt portion)
2. Deduct your Annual Exempt Amount (£3,000 for 2026-27)
3. Pay CGT at 18% (basic-rate taxpayer) or 24% (higher/additional-rate) on residential property

You must report and pay CGT on UK residential property within 60 days of completion using HMRC's online Capital Gains Tax on UK Property service. This is separate from your Self Assessment tax return.

Record-Keeping

Keep records of:

• Purchase and sale contracts (completion dates, prices)
• Evidence of occupation (utility bills, council tax, electoral roll)
• Dates of any absences and reasons (employment contracts, overseas work records)
• Any nomination elections you made
• Improvement costs (these can increase your base cost and reduce your gain)

You need to keep these for at least five years after the 31 January following the tax year of sale.

What to Do Next

If you're selling your main home and expect full PPR to apply, you typically don't need to report the sale to HMRC at all—though keeping records is wise in case of future enquiries.

If your situation is more complex—multiple properties, periods of absence, partial letting, or business use—you'll want to calculate whether you have a taxable gain.

For specific questions about your circumstances: Use the AI Tax chat at myaitax.info to get immediate guidance on how PPR applies to your situation, whether you need to make a nomination election, or how to calculate your taxable gain.

For complete handling of your property sale and CGT reporting: AI Accountant can manage the entire process, from calculating your exact liability to filing your return within the 60-day deadline and ensuring you claim all available reliefs. This is particularly valuable for complex situations involving multiple properties, overseas work, or partial letting.

The key is to understand your position before you sell. PPR is generous, but the rules have tightened in recent years, and getting the calculation wrong can be expensive. With the right information and planning, most homeowners pay no CGT at all when selling their main residence.