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Principal Private Residence Relief (‘PPR’) …Are you letting out your former home?

Principal Private Residence Relief (‘PPR’) …Are you letting out your former home?

If you are letting out your former home you will cease to be entitled to PPR, other than for the last 18 months of your ownership.  However, a different relief is available called private lettings relief which can cover any capital gain not offset by your PPR.  This is a lesser known relief which often gets overlooked however it can be really valuable.

Private letting relief gives relief for the lower of the following three amounts:

  • £40,000
  • The gain relating to the lettings period
  • The gain already exempt under PPR

Lettings Relief cannot turn a gain into an allowable loss or increase an existing loss but it can be used to reduce a gain to or closer to zero.

Remember it is not always bad news; elections and other reliefs such as private lettings relief may be available but if advance consideration is not taken you could suffer tax on a gain you thought was exempt.

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