Private residence relief and couples


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Private residence relief and couples

Introduction – private residence relief and couples

Generally speaking, under the Self-Assessment system, husband and wife (and more recently civil partners) are treated independently for tax purposes.

However, if this was the case for private residence relief, it would put such persons, where they hold more than one property, at an advantage as they would potentially be able to elect for different properties to be their main residences.

As such, the legislation sets out that married couples and civil partners may only have one residence or main residence between them.

Any election made under TCGA 1992, s222 must be the same for both.

Private residence relief and couples – transfers between spouses or civil partners

Transfers between spouses and civil partners are unlikely to crystallise a tax charge.

This is not because of a blanket exemption but because such a transfer will be deemed to take place at value that gives rise to neither a gain nor a loss (nil gain/nil loss). This essentially means that the deemed proceeds will be equal to the base cost for CGT purposes.

The recipient spouse or civil partner will be deemed to receive this property at the same value – in other words, the historic base cost. For all intent and purpose, this means the spouse or civil partner inheriting the other’s historic gain.

Where a property is transferred from one spouse or civil partner to the other and it qualified as a main residence, the recipient will acquire the transferor’s period of ownership provided that:

  • They are living together; and
  • the property is occupied as their main residence or an election has been made under TCGA 1992, s222

If the property did notqualify as such, then the recipient’s period of ownership for CGT purposes is the usual date – ie the date on which they acquired it.

Private residence relief and couples- Divorce

As stated above, a married couple or civil partners can only have one main residence between them whilst they are living together as such.

However, this principle falls away where there is a separation. This is the case for CGT purposes more generally, and the general principle that a transfer between them can take place without an immediate tax charge also falls away.

Once separated, each of them will be treated as individual units for the purposes of private residence relief.

This means that, once again, they can make an election as to which property is their main residence.

Private residence relief and couples – moving out of the residence

In reality, separation usually leads to one of the couple moving out of the family home.

Of course, the other party may also have several decisions to make including moving out of the property as well or look to carry on living there.

The former couple could also take the decision to put the property on the market and look to sell. It is also possible that a Court may make an order to sell the property or may make an order that a legal interest in the property is transferred to one spouse or the other.

Where a property is sold then some of the proceeds may be retained to form part of a divorce settlement.

The leaver spouse or civil partner disposing of their interest in the former main residence will continue to attract relief for a period of 18 months after leaving the property.

If the property is not sold within this 18-month window, then it is possible to obtain further relief where there is a transfer of the property by the leaver spouse or civil partner to the one that is staying on (TCGA 1992, s225B)

Private residence relief and couples – TCGA 1992, s225B

This election allows the former couple’s residence to be deemed to be the transferring member of the couple’s main residence from the date their occupation ended until either the earlier of:

  • The date of transfer; and
  • The date on which the property ceases to be the only or main residence of the spouse or civil partner to whom the property is transferred.

The following conditions must be met:

  • The transfer must be made as part of the separation / divorce arrangements. This might be by virtue of a court order or mutual agreement;
  • The election was made whilst the receiving spouse or civil partner remains in occupation of the property as their main residence;
  • The Leaver spouse or civil partner must not make any other main residence elections

Mesher Order

A Mesher Order is a Court Order that dictates how the family home will be dealt with following a divorce.

The Order allows the sale of the family home to be deferred for a certain length of time or until a specific event takes place – for example, when the kids leave school.

Conclusion – private residence relief and couples

The CGT legislation takes in to account that relationships do breakdown and the rules are clear on what happens in respect of the former private residence.

Armed with all the facts and a little planning, it should be possible to arrange the couples affairs in the most efficient manner.


If you have any queries on private residence relief for couples, or any other property tax matters, then please do not hesitate to get in touch.



Private residence relief for couples was last updated on 17 September 2018


1 Comment:

  • Jon Ormerod / Reply

    Hi I have read your article with interest but still seek some information…
    I became CP’d and me and my partner each have a property. We have told HMRC and nominated one as the main residence (we don’t live together)
    They are now asking from which date it became the main residence. I don’t know what to put and what the implications are. The main concern is if the properties were sold.
    Should I put the date the CP took place? Why is the date relevant??
    Many thanks for taking time to read my question

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