Selling Property: What Are the Tax Implications?
Selling a property is often one of the biggest financial steps you’ll take. But while the focus is usually on the sale price, it’s just as important to understand whether there could be a tax bill waiting for you.
The tax treatment depends on how you’ve used the property. If it’s always been your home, the position is usually straightforward. But if you’ve moved out, rented it out, or kept it as a second property, the rules are more complex.
In this article, we’ll cover:
How tax works when selling your main residence
What happens if you move out and keep the property
The nine-month final period rule
Letting relief and when it still applies
Selling Your Main Residence
If you sell a property that has always been your only or main residence, you’re normally covered by Principal Private Residence (PPR) relief. This relief means that any gain when you sell the property won’t usually be taxable.
PPR relief applies as long as the property was genuinely your home — somewhere you lived, rather than simply owned. In most cases, this makes selling your main residence completely tax-free.
Moving Out and Keeping the Property
Things change if you move out but keep the property. For example, you might buy a new home or move into rented accommodation but decide to hang on to your old house.
In this situation, you won’t usually get full PPR relief for the entire period you owned the property. The years you lived there are covered in full, but the period after you moved out is treated differently.
The Nine-Month Final Period Rule
To make things fairer, HMRC allows you to treat the final nine months of ownership as if you were still living in the property — even if you weren’t.
This means that if you lived in the property at any point, the last nine months before sale are automatically covered by PPR. It gives some protection for people who move out but don’t immediately sell, or who are in the process of buying another property.
It’s important to note that this nine-month rule only applies if the property was at some point your main residence. If it was never your home, no relief is available.
Letting Out Your Former Home
If you rent the property out after moving out, things become more complicated. Until a few years ago, letting relief was widely available to reduce the tax bill on a property that had once been your main home but was later let to tenants.
The rules have since tightened significantly. Now, letting relief is only available if you share the property with your tenants. In practice, this means far fewer people qualify. For those who do, it can still reduce the taxable gain — but it’s no longer a blanket relief for landlords who move out and let their property.
Why This Matters
Many people assume that selling their home will never create a tax bill. That’s true if it’s always been your main residence. But if you:
Move out and keep the property,
Let it out to tenants, or
Own more than one home at the same time,
…then tax can become an issue when you eventually sell.
The rules are detailed, and even small differences in timing — such as when you moved out, how long you let the property for, or whether you shared with tenants — can make a big difference to the final bill.
Getting It Right
If you’re thinking of selling, it’s worth reviewing your position before you put the property on the market. Understanding how PPR relief, the nine-month rule, and (where available) letting relief apply could save you from a nasty surprise when the sale completes.
Need Help With a Property Sale?
At Tax Matters, we advise homeowners, landlords, and executors on the tax implications of selling property. We’ll help you check which reliefs apply and guide you through HMRC’s rules, so you don’t end up paying more than you should.
