The government published draft legislation on the changes to Private Residence Relief (PRR). The draft legislation is subject to consultation which closes
on 5 September 2019.
For properties that have not been occupied throughout the period of ownership, available deductions for capital gains tax purposes will be limited as follows:
the final period exemption will be reduced from 18 months to 9 months and
lettings relief will be reformed so that it only applies in those circumstances where the owner of the property is in shared-occupancy with a tenant. Letting
relief will be restricted or curtailed for disposals on or after 6 April 2020, regardless of when the period of letting took place.
Brian Slater, Chair of CIOT's Property Taxes Sub-committee, said:
'Many home owners are still unaware that the final period exemption was reduced from 36 months to 18 months in 2014. A further reduction to just nine months
is likely to bring more property disposals within the scope of CGT.
Another aspect of the relief which is also changing from 6 April 2020 is lettings relief, limiting it to narrowly defined circumstances in which the owner
shares occupation of their house with a tenant.'