Will I lose Private Residence Relief if I stand up to eat my tea?

A question we are often asked is, how long do I need to live in my house to make it my principal private residence, and therefore be able to claim full or partial relief from capital gains tax?

There is no black and white answer to the question, because HMRC look at the “quality” of occupation, as well as the “quantity.”

In a  recent case which illustrated the point (Yechiel v R&C Comissioners), the taxpayer moved into a house and slept there every night for four months. But apart from a bed and a side table, he had very little furniture, and had his meals standing up….or else, in the car! HMRC latched on to this fact, (as well as the fact he took his washing to his mum’s) and successfully argued at Tribunal that his occupation of the house did not have the quality of a residence for capital gains tax purposes. As this was just a Tribunal decision, it does not set any precedent. But it does indicate the approach of HMRC in such cases. It is not enough to sleep in your house; you should spend some quality time in it, too.

If you would like to discuss this in more detail please email David Bennett or call us on 01772 821 021.