Tell HMRC about Main Home

One must make sure to tell HM Revenue & Customs (HMRC) which of your properties should be considered as your main home for tax purposes when you buy a second (or even third) home. Any property that has always been your main home is free of capital gains tax. So is the gain attributable to any periods in which any other property has been your main home, plus the gain for the last three years of ownership, even if you did not live there during the period.

You may exclude from gross taxable income on your tax return all or part of the gain from your main home sale if you meet certain ownership and use tests at the time of the home sale. You can also exclude up to $500,000 on a joint tax return or $250,000 on a single tax return, of the taxable gain that is obtained on the home sale or exchange of a principal residence. You must have owned and lived in the home as your principal residence for at least two taxable years of the five tax years prior to the home sale or exchange to exclude it on your tax return.