Taxation of Chargeable Gains Act 1992 section 226A

Private residence relief: cases where relief obtained under section 260

Section 226A prevents private residence relief from applying where the property's acquisition cost has been reduced by gift hold-over relief claimed under section 260 (gifts on which inheritance tax is chargeable).

• Private residence relief is denied where the base cost of a dwelling has been reduced by a section 260 gift hold-over relief claim on an earlier disposal
• If the hold-over claim was made before or at the time of the later disposal, private residence relief simply does not apply; if the hold-over claim is made afterwards, private residence relief is treated as never having applied, and tax assessments are adjusted accordingly
• Transitional rules for disposals on or after 10 December 2003 may allow partial relief for the period of ownership before that date, with the gain time-apportioned between the qualifying and non-qualifying periods
• An exception applies for maintenance funds for historic buildings under section 226B, and if a section 260 claim is revoked the restriction falls away as if the claim had never been made