CGT private residence exemption

The CGT exemption for gains arising on the disposal of, or of an interest in, a dwellinghouse which has been the taxpayer’s only or main residence, is of the greatest importance – the more so since the marginal CGT rate has been effectively increased by over 50%, from 18% to 28%, in the Emergency Budget on 22 June 2010. The legislation, in s222, contains elaborate rules for apportioning the gain between exempt and non-exempt parts, where property has not been the taxpayer’s only or main residence throughout his ownership. However, no part of the gain will be exempt unless the property has factually, been occupied by the taxpayer as his ‘residence’ at some period during this ownership. This was the point at issue before the First Tier Tribunal in Favell v HMRC [2010] UK FTT 360.