Owning more than one home can create valuable Capital Gains Tax planning opportunities, but only if you understand how and when to nominate a property for Private Residence Relief.

Typically, you do not have to pay Capital Gains Tax (CGT) when you sell a property that has been your main family home. In contrast, properties that have only been used as investments and never as a primary residence do not qualify for this exemption. This tax relief is known as Private Residence Relief (PRR).

It is increasingly common for taxpayers to own more than one home, and there are a number of important considerations for homeowners. An individual, married couple, or civil partnership can only benefit from PRR on one property at a time. However, it is possible to choose which property benefits from the CGT exemption when it is sold by making an election.

To nominate a property as your main home, you must write to HM Revenue and Customs (HMRC), specifying the full address of the home you want to nominate. All owners of the property must sign the letter. If your combination of homes changes, you must make a new nomination within two years of the change. You must also have lived in the house as your main or only residence at some point in the past.

Special rules apply for overseas properties and for non-UK residents. Since 6 April 2015, an overseas property can only be nominated if you lived in it for at least 90 days in the tax year. It is important to carefully consider the timing and frequency of making or changing an election to ensure maximum relief.

Even if you own more than one home, certain periods always qualify for relief. You are entitled to PRR for the last nine months before you sell your property, even if you were not living there at the time. Other qualifying periods may include the first two years of ownership if the property was being built or renovated, or if you could not sell your previous home, provided you lived in it as your only or main residence within two years of acquiring it.