What is PPR relief?

Principal Private Residence (PPR) Relief exempts you from CGT on any gain arising when you sell your home provided it was your only or main residence during ownership. If you didn’t live there full time, the relief is usually pro-rated based on the time you occupied the property.

What about a second investment property?

Normally, when you sell a second property you generally pay Capital Gains Tax (CGT) calculated at 33% of the profit as Principal Private Residence (PPR) relief would not normally apply.

However, you may also qualify for PPR relief if the property was used as the sole residence of what Revenue call ‘a dependent relative’. By providing a second property to a dependent relative rent-free, you may qualify for full or partial PPR relief when the property is finally sold. In addition, as the dependent relative is living in your property as their sole residence, it cannot be assessed for Fair Deal purposes should the relative have to go into a nursing home.

Who qualifies as a dependent relative?

A dependent relative generally means a person who:

• Is incapacitated by old age (normally 70+) or infirmity and unable to maintain themselves, OR
• Is a relative of yours e.g. parent, grandparent, brother, sister etc AND is widowed (or your widowed mother or father) whether incapacitated or not.

What are the key conditions?

All of the following conditions must be met:

• The relative must live in the property rent-free. Even “below-market” rent can jeopardise the relief.
• The property must be the relative’s sole residence.
• The relative must be incapacitated by old age (normally 70+) or infirmity and unable to maintain themselves, or be your or your spouse’s widowed mother or father whether incapacitated or not.