ACCA Taxation (F6) Practice Exam

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Prepare for the ACCA Taxation (F6) Exam. Study with interactive quizzes, detailed explanations, and comprehensive resources to help you master essential tax concepts and succeed in your exam!

Practice this question and more.

Is the sale of a main or only residence subject to capital gains tax?

Yes, it is fully taxable
No, it is exempt from capital gains tax
It is only partially exempt
It is exempt only if owned for more than five years

The correct answer is: No, it is exempt from capital gains tax

The sale of a main or only residence is generally exempt from capital gains tax due to the principal private residence relief (PPR). This relief is designed to alleviate the tax burden on individuals when they sell their homes, recognizing that residential property is a fundamental aspect of personal life. In most jurisdictions, if the property has been the taxpayer's only or main residence throughout the period of ownership, any gain realized on the sale of that property is subject to full exemption from capital gains tax. This reflects the policy intent to allow individuals to buy, live in, and eventually sell their homes without facing additional tax liabilities on the increase in value over time, encouraging home ownership and stability. The other choices incorrectly suggest that capital gains tax applies in full, partially, or under specific ownership duration conditions. These options do not align with the typical tax framework that grants comprehensive relief for the sale of a primary residence.