# Fraction to use when calculating PRR

How many years ownership to use for PRR, if one owner hasn't owned for the whole period

• ### ICAEW Membership Spending

I have a question regarding Private Residence Relief, PRR. I've simplified the circumstances, below.

• 2004 Jill bought house in her own name, before married.
• 2009 Jim moved in
• 2014 Jill & Jim marry and house transferred in to joint names
• 2019 Both moved out and house then rented out
• 2024 House sold

My question is:

Jill’s PRR goes from 2004 to 2019 so 15 years of PRR. Therefore, 15 year out of 20 years of ownership are exempt.

Jim’s PRR is 10 years. However, is this a proportion of?

1. 20 Years, from when Jill bought it,
2. 15 Years from when he moved in
3. 10 Years, from when 50% of the house was transferred to him?

Or is Jim actually only entitled to 5 years PRR, from the date 50% transferrerd to him, 2014, until date moved out, 2019??

Thanks

NB, I've ignored the final 9 months..

### Replies (8)

By FactChecker
24th Jun 2024 20:00

Why would Jim be entitled to PRR for any period when he wasn't even part-owner?

I suspect the bigger issue (or at least one to tackle first) will be ascertaining the gain attributable to each person - prior to then ascertaining the relief available to each.

Thanks (1)
By Tax Dragon
24th Jun 2024 20:23

FactChecker wrote:

Why would Jim be entitled to PRR for any period when he wasn't even part-owner?

Because of deeming provisions, in this case s222(7).

@OP, be aware that this provision has been rewritten and you may need to apply an 'out of date' version based on when the property was put into joint names. Off the top of my head (ie without bothering to look it up) I think his PRR fraction will be the same as hers.

Thanks (3)
By Ruddles
24th Jun 2024 20:26

FactChecker wrote:

Why would Jim be entitled to PRR for any period when he wasn't even part-owner?

Because that’s what the legislation says?
Thanks (3)
By FactChecker
24th Jun 2024 21:07

I was hoping/intending to gee OP into declaring what he felt had been established and what remained unclear ... but since TD and you have stepped onto the stage:

HMRC's internal manual (CG64920) says:
"S222(7) TCGA92
Relief is available in principle if the dwelling-house is within s222 TCGA92.
A dwelling-house will be within s222 TCGA92 if it has been its owner’s only or main residence at any time in the period of ownership defined at s222(7) TCGA92.
For this purpose, the period of ownership is taken to begin at the date of the first acquisition on which the owner could have incurred expenditure deductible in computing the amount of the gain."

So no reference there to deeming (as in owner/ownership being indistinguishable between Jill and Jim even though he only came on the scene 5 years later and it was a further 5 years before he obtained part-ownership).

Then, moving on to the legislation, s222(7) starts with:
"In this section and sections 223 to 226, “the period of ownership” where the individual has had different interests at different times shall be taken to begin from .."
... but, from what I gathered from OP's info, there's been no mention of Jim having "had different interests at different times" - so I took this to not be relevant.

I sort of know I'm wrong (neurons screaming at me) but I'm struggling to see where it says what you are all agreed on. Anyone got a map?

Thanks (1)
By Ruddles
24th Jun 2024 21:24

You moved on from HMRC’s guidance too soon. Have a look at CG64925

Thanks (3)
By FactChecker
24th Jun 2024 22:11

Impatient, moi? Thanks.
Interesting that it is at pains to emphasise: "This provision only applies for the purpose of computing private residence relief. It has no effect on the computation of the gain which arises on any disposal by the transferee spouse".

Anyway I'll try to blame a heat-addled brain, but I think my laziness allowed me to be easily distracted by so much emphasis throughout (and in examples) of the transfer occurring through inheritance - so didn't 'connect' the clauses properly to fit OP's scenario (which is closer, but not much, to Angela Rayner territory).

[I thought of claiming that I was mis-remembering the changes that took effect where the disposal between spouses or civil partners living together was made *before* 6 April 2020 ... but I'm a truthful old curmudgeon and that wasn't it.]

Thanks (1)
By Matrix
24th Jun 2024 20:13

1.

Thanks (1)
By Tony S
25th Jun 2024 11:14

Thank you for taking the time to answer.
Obviously I had greatly simplified the situation, apologies if l left anything out which might have helped .
I had initially thought option 1 was correct but having done more research I started to doubt myself.....

Thanks (0)