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Most people think that if they sell their home any gain arising will not be subject to capital gains tax. Broadly speaking this is correct provided they have lived in the property as their main residence for the entire period of ownership. There are certain absences from the property which are permitted and relief will still be due. However, the relief is not always due where the house has a particularly large garden, or perhaps a pony paddock
attached. The legislation permits an area of up to 0.5 of a hectare of land, garden or grounds to be sold as part of a main residence and qualify for relief. In some cases a larger area can qualify for relief if it is required for the reasonable enjoyment of the dwelling house, having regard to the size and character of the dwelling house.

This condition is, of course, subjective and there are many factors that need to be taken into account. Each case must be considered on its own merits as there are no hard and fast
rules to determine what qualifies once the 0.5-hectare limit is exceeded.

HMRC has published guidance on what qualifies as garden or grounds and there has also been a significant amount of case law in this area. Land which is in agricultural use, for example, can never qualify for main
residence relief.

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