CG65155 - Private residence relief: exchanges of interests

Individuals who are joint owners of land may exchange interests so that each of them is sole owner of part of that land. Individuals who are sole owners of land may exchange their interests.

The method of computing chargeable gains on an exchange is explained at CG13090+.

Where an individual disposes of an interest in a dwelling-house which has at some time been their only or main residence, in exchange for an interest in another asset, private residence relief is due in the usual way on the dwelling-house sold. The value of the asset received is the measure of the consideration received for the disposal of the dwelling-house.

Relief from Capital Gains Tax on the exchange of joint interests may be obtained under s248A - 248E TCGA92 in relation to disposals on or after 6 April 2010.

Roll-over relief under s248E TCGA92 applies where five conditions are met. These are

  1. a person (“the landowner”) and one or more other persons (“the co-owners”) jointly hold an interest in two or more dwelling-houses.
  2. the landowner disposes of an interest (“the relinquished interest”) in one or more of the dwelling-houses to the co-owner or one or more of the co-owners.
  3. the consideration for the disposal is or includes an interest (“the acquired interest”) in one of the other dwelling-houses.
  4. as a consequence of the disposal (together with any related disposals) —
    • the dwelling-house in which the landowner acquires an interest becomes the only or main residence of the landowner, and
    • each of the other dwelling-houses becomes the only or main residence of one (and only one) of the co-owners.
  5. if each dwelling-house were disposed of immediately after the disposal (or disposals) then by virtue of sections S222 TCGA92 and S223 TCGA92 no part of the gain accruing on each of those disposals would be a chargeable gain.

 

Definition of terms

S248(E) TCGA92 defines some of the terms used in the legislation for the purposes of the section.

  • Co-owner means any person who holds an interest in a dwelling-house jointly with the landowner.
  • Holding land jointly means holding land as joint tenants or tenants in common in England, Wales and Northern Ireland as well as coparceners in Northern Ireland. In Scotland, it means holding land as joint owners or owners in common.
  • A related disposal is a disposal of an interest in a dwelling-house
    • by the landowner to a co-owner, or
    • by a co-owner to the landowner or another co-owner.

Spouses or civil partners who are living together are treated as a single landowner or a single co-owner for the purposes of the relief.

 

S248E(7) TCGA92: roll-over relief

Where the relevant conditions are met then the landowner and the co-owner or co-owners may make a joint claim for relief. The time limit in S43 TMA70 applies, see CG60310.

The exchange shall be treated:

  • as if the consideration for the disposal of the relinquished interest in the dwelling-house was an amount giving no gain and no loss, and
  • as if the acquired interest had been acquired -
    • at the time it was originally acquired jointly, and
    • for the same allowable costs as would have been allowed in computing a gain on a disposal by the co-owners.