This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Does the 36months rule for PPR (Section 223(2) ) override everything else ?

Joined:Wed Aug 06, 2008 3:12 pm

Postby zorba » Tue Aug 10, 2004 2:49 pm

Dear contributers,

I bought my current house in Belfast last year (Sept '03). I have lived in it since then. After I'd been in a few weeks I started letting out some of the rooms to help with the mortgage (lender is aware). I let out on average 3 of the 5 bedrooms at any given time.

I am planning to move out and move into a new house (which will be jointly bought with my partner).

Since the current house has appreciated by about £50k since last year, CGT becomes a factor.

I had initially planned to hold onto the house and let it out for a while, but have read on the Inland Revenue website that I could lose part of my PPR, due to letting it out.

Also, I may already have lost some PPR due to already having let out portions of the house.

However, hope sprang eternal when I read the following in the IR's CGT Manual online:

"Section 223(2) deems the final 36 months of ownership to be a period of only or main residence, see CG64985+"

...which seems to imply that HOWEVER the house has been occupied in the last 3years before disposal, it will be deemed to be "a period of only or main residence" - i.e. Section 223(2) seems to overide the the lettings issues, and lettings etc. will only be an issue if e.g. I held onto the house for longer than 3yrs.

Which relief will take precedence - the 3yrs or the lettings ?
(BTW I know how to work out the CGT due if Lettings takes precedence here)

Please could someone give me some advice here, as it will help me decide whether I need sell now, before I lose some (more?) PPR. Many thanks.

D Sum
Joined:Wed Aug 06, 2008 3:12 pm

Postby D Sum » Thu Aug 12, 2004 1:36 am


The 3yr rule does override everything else, but you must remember, that the criteria for qualifying is that it must qualify as your PPR. Therefore ensure that you have enough evidence to prove that fact (council tax bills etc)

Also if you do not sale the house for over 3yrs, remember lettigns relief will be availible at over £40k for the proportion of the house that is not your PPR - not the whole house. Therefore for example if after 6 years you sell your house, the last three will be exempt under the last 3yrs rule. Say there is £50k of gain for the first three years, 2/5ths will qualify for PPR leaving £30k of gain which will be covered by the lettings relief.

Hope this helps


Return to “Capital Gains Tax, CGT”