Richard Curtis considers the basic principles of the capital gains tax exemption for only or main residences.
For most of us, the house in which we live – our ‘only or main residence’ in the terms of the tax legislation – is our most valuable asset. For many of us, it is one that has increased in value substantially over the years.
For most assets, an increase in value is subject to capital gains tax (CGT) on a sale or disposal, but there is a specific exemption for the only or main residence. This applies to a house and garden or grounds of up to half a hectare (or a larger area if this is needed for the reasonable enjoyment of the property, bearing in mind its size and character).
Further, some periods when a property is not, in fact, occupied as the main residence may still qualify for the exemption. Examples are the last nine months of ownership, absences of up to three years
