It is increasingly common for people to own more than one residence. However an individual can only benefit from the CGT exemption on one property at a time. In the case of a married couple, there can only be one main residence for both. Where an individual has two (or more) residences then an election can be made to choose which should be the one to benefit from the CGT exemption on sale. Note that the property need not be in the UK to benefit although foreign tax implications may then need to be brought into the equation.
| David has a property he lives in during the week and a country cottage where he lives at weekends. A valid election may be made for the country cottage to be exempt for CGT purposes. It does not matter that it is not the main residence. |
The election must normally be made within two years of acquiring a second residence and the potential consequences of failure to elect are shown in case study 1.
Furthermore the case study demonstrates the beneficial rule that allows CGT exemption for the last three years of ownership of a property that has at some time been the main residence.