Principal Private Residence (PPR) Relief in Ireland: Complete Guide to Reducing Capital Gains Tax

What Is a Principal Private Residence (PPR)?

A Principal Private Residence (PPR) is a house or apartment which you own and occupy as your only, or main, residence. Consequently, you are exempt from Capital Gains Tax (CGT) if you lived there for the entire ownership period. This relief extends to land up to one acre around the home, excluding the site itself. Generously, the last 12 months of ownership count as occupation to help you move. However, relief is restricted if the sale price reflects development value. Secure your exemption to protect your profit.

Understanding Principal Private Residence Relief

The Principal Private Residence (PPR) relief is a valuable tax exemption that can significantly reduce or eliminate Capital Gains Tax (CGT) when you sell your main home. To qualify for Principal Private Residence relief, the property must have been your primary residence throughout the period of ownership. This relief not only covers the home itself but also includes land up to half a hectare, ensuring that most homeowners can benefit fully from the Principal Private Residence exemption.

A valuable relief exists on the sale of the family home but in certain situations careful planning is required to ensure that the relief is obtained. If you live in the Ireland area we, at Fuchsia Bell tax advice, can provide taxation advice to ensure that maximum opportunity is taken of principal private residence relief.

Lettings Relief and PPR

Lettings Relief was abolished in Ireland for rental periods starting on or after January 1, 2023. Previously, this helped reduce tax on rented former homes, but now you must rely on Principal Private Residence (PPR) Relief. This exemption eliminates Capital Gains Tax (CGT) if you owned and occupied the property as your main home. If you lived there only part of the time, you calculate partial relief proportionally. Fortunately, the final 12 months of ownership generally count as deemed occupation, and the Rent a Room scheme doesn’t hurt your claim. Check your dates to avoid a surprise tax bill. You must rely on Capital Gains Tax services for advice on Principal Private Residence (PPR) Relief.

PPR Relief Ireland: How the Relief Works

Principal Private Residence (PPR) Relief in Ireland is a Capital Gains Tax (CGT) exemption for your main home. To qualify for full relief, you must occupy the property as your only residence throughout ownership. If you lived elsewhere, you calculate partial relief based on your time there, though the final 12 months generally count as deemed occupation. Importantly, this relief excludes development value and business use. You must calculate and claim this benefit on your tax return to avoid the 33% tax charge.

The capital gains tax (CGT) exemption for gains made on the sale of your home is one of the most valuable reliefs from which many people benefit during their lifetime. The relief is well known: CGT exemption whatever the level of the capital gain on the sale of any property that has been your main residence. In this factsheet we look at the operation of the relief and consider factors that may cause it to be restricted.

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How Do You Know if a Property Is Your PPR?

A property is your Principal Private Residence (PPR) if you own and occupy it as your only or main home. To qualify for full relief, you must have physically lived there for the entire ownership period. You can only have one main residence at a time. To prove this, you need evidence like official correspondence, utility bills, and driver’s licenses linked to the address. While the relief covers grounds up to one acre, business use restricts it. Furthermore, merely inheriting a house does not automatically qualify you; you must move in. Gather your documents to secure your exemption with the help of online accountants in Dublin.

Several important basic points

Only a property occupied as a residence can qualify for the exemption. An investment property in which you have never lived would not qualify.

The term ‘residence’ can include outbuildings separate from the main property but this is a difficult area. Please talk to us if this is likely to be relevant to you.
‘Occupying’ as a residence requires a degree of permanence so that living in a property for say, just two weeks with a view to benefiting from the exemption is unlikely to work.

How Long Must You Live in a Home for It to Become Your PPR?

There is no fixed minimum period you must live in a home for it to become your Principal Private Residence (PPR). Instead, authorities look for permanence, continuity, and genuine intention. To qualify for Full Relief, you must own and occupy the property as your main home. However, the last 12 months of ownership often count as deemed occupation even if you move out. Additionally, transfers of land up to €500,000 to a child may be exempt. Prove your residency to claim your full tax break.

Land Adjacent to Your Home and PPR Exemptions

Principal Private Residence (PPR) relief extends to land adjacent to your home if used as gardens or grounds. This Capital Gains Tax exemption covers up to one acre, uniquely excluding the house’s actual footprint. However, the relief does not apply if the land has development value or serves business purposes. Generally, you must sell the grounds alongside the residence to qualify. Measure your plot carefully to secure your full tax break.

The exemption includes land that is for ‘occupation and enjoyment with the residence as its garden or grounds up to the permitted area’. The permitted area is half a hectare including the site of the property which equates to about 1.25 acres in old money! Larger gardens and grounds may qualify but only if they are appropriate to the size and character of the property and are required for the reasonable enjoyment of it. This can be a difficult test. In a court case the exemption was not given on land of 7.5 hectares attached to a property. The owner said he needed that land to enjoy the property because he was keen on horses and riding. The courts decided that the owner’s subjective liking for horses was irrelevant and, applying an objective test, the land was not needed for the reasonable enjoyment of the property.

Selling land separately

What if you want to sell off some of your garden for someone else to build on? Will the exemption apply? In simple terms it will if you continue to own the property with the rest of the garden and the total original area was within the half a hectare limit.

Where the total area exceeds half a hectare and some is sold then you would have to show that the part sold was needed for the reasonable enjoyment of the property and this can clearly be difficult if you were prepared to sell it off.

What if on the other hand you sell your house and part of the garden and then at a later date sell the rest of the garden off separately, say for development? Then you will not get the benefit of the exemption on the second sale because the land is no longer part of your main residence at the point of sale. For complex cases like selling part of your land while retaining PPR relief, check our guide on selling your property but living overseas.

Making a PPR Election (When You Own More Than One Property)

If you own more than one property and live in both, you can formally nominate one as your Principal Private Residence (PPR) to avoid Capital Gains Tax. You must submit this written election within two years of acquiring the second home. Since you can only have one main residence at a time, you should select the property likely to produce the largest gain. If you miss the deadline, the tax authority decides for you based on facts. Choose wisely to protect your profits.

More than one residence

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 (or civil partnership), 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 there are additional restrictions from April 2015 detailed below. Also foreign tax implications may need to be brought into the equation.

The election must normally be made within two years of the change in the number of residences and the potential consequences of failure to elect are shown in the case study that follows.

Furthermore the case study demonstrates the beneficial rule that allows CGT exemption for the last nine months of ownership of a property that has at some time been the main residence. Where the owner of the property is in long term care or a disabled person, and meets the necessary conditions, they benefit from a CGT exemption for the last 36 months of ownership. If you want to know more about this or similar topics, follow our Fuchsia Bell website or read our blog.

Special PPR Situations

Special PPR Situations allow you to claim Principal Private Residence (PPR) Relief even if you didn’t live in the home continuously. For instance, the final 12 months of ownership always count as occupation. You can also claim absences for work or health reasons, provided you occupied the home immediately before and after the break. However, relief is restricted by partial business use or if the land has development value. Understand these exceptions and get professional advice from Fuchsia Bell consultants to reduce your Capital Gains Tax liability.

Summary of Key PPR Rules in Ireland

In Ireland, “PPR” primarily refers to Principal Private Residence Relief, which exempts your main home and up to one acre of land from Capital Gains Tax (CGT). To qualify, you must occupy the property as your primary residence, though valid absences for work or health exist. Be aware that partial business use restricts this relief. Additionally, do not confuse this with the Non-Principal Private Residence (NPPR) charge, a past levy on second homes active between 2009 and 2013. Keep thorough records to claim your full exemption. For detailed guidance and to ensure maximum relief, contact Fuchsia Bell today.