“What’s stopping you buying a house living in it for 6 months whilst renovating then sell for profit and no capital gains tax on primary residence? I’m guessing there is some catch somewhere?”
In short yes. Absolutely! There is a catch. The main premise of the question is based on the fact that people can normally sell their main home without incurring a tax charge. What a lot of people don’t seem to know though is that right there in the same legislation that provides the relief is the ability for HMRC to restrict the relief.
HMRCs manuals in “CG65210 – Private residence relief: purpose of realising gain”
“TCGA92/S224 (3) denies relief when the dwelling house has been acquired for the purpose of realising a gain from its disposal, or there has been subsequent expenditure for the same purpose. The Section is very widely drawn. It also applies where the acquisition or the expenditure was only partly for this purpose.
Anyone who buys a dwelling house is likely to hope that, in the fullness of time, they will make a gain on its disposal. One house may be chosen over another because its value is more likely to appreciate over time. These cases could be said to fall within the words of the statute but relief should not be restricted.
It would be unreasonable and restrictive to apply the legislation in this way. The subsection should only be taken to apply when the primary purpose of the acquisition, or of the expenditure, was an early disposal at a profit.”
What is interesting is that while choosing one house over another would not, it seems, be grounds for a denial of the relief it is pretty clear that they can stop people from becoming serial home doer uppers quite easily using this.
How many is too many? Who knows. How quickly is too quickly? Who knows but someone specifically moving a couple of times a year would definitely fall within the exclusion from the relief.