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Will any of that initial period (renovating and friend occupation) be included in our private residence period for tax purposes?

Question We bought a house in 2006, our only property at the time. We were living elsewhere in rent-free accommodation, part of my husband’s work. We spent 18 months renovating the house ourselves. Our friend then lived in the house, paying most but not all of the mortgage. Probably irrelevant, but we paid the council tax. We then moved into the house in 2010 and lived there until the end of 2015, when we purchased a second house which has become our main residence. We have rented out the first house out ever since but would like to sell early next year. We're not sure if any of that initial period (renovating and friend occupation) could be included in our private residence relief period for capital gains tax purposes.

Arthur Weller replies:

Look at HMRC guidance in its Capital Gains manual (at, where you can see that if the initial period can be classified as 'qualifying job-related accommodation' then it can be deemed occupied as far as the main residence relief rules are concerned. As far as the period the property was occupied by a friend is concerned, if the amount that they paid could be construed to be a commercial rent, then you can be eligible for lettings relief for this period - see the end of

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