Selling my Home

xpression

Hello, First time post here,

I have bought a second home down the country 3 years ago, my GF moved in to the property when we bought it and still lives and works in that area, I however have been working and living in the area of my first house and visiting my country home to see herself at the weekends.
Now with property prices the way they are, i am looking to sell my first house so I can give up my job, move down the country, pay off the second house and live of the interest on the balance (well partially live off it). I did consider renting the house but I would earn more on interest that I would on Renting,
Will I have to pay CGT on my first house ?

Any Ideas,

Thanks

elivsvonchiaing

Not a tax expert here but got this here: http://www.taxireland.ie/irishtaxsystem/cgt.asp

See "(x) a gain on a dwelling-house (including grounds of up to one acre) where the house has been used as an individual’s only or main residence (or, under certain conditions, as the sole residence of a dependent relative) during the individual’s period of ownership. In certain circumstances there may be a restriction on the relief or partial relief may be due."

This (x) is a CGT exepmtion.

Think you should be okay. Just don't sue me if I'm wrong...

You should consider holding on to it if you can rent it and cover the repayments through that. Then release equity on it and purchase another place that the rental covers and so on. That way in the long run you own lots of property's; and if you make the right moves an income off the rental income, and much more in capital appreciation then you would in interest.

xpression

Thanks and I wont sue!!,

xpression

Yes I have considered that but there is always the risk the markets will fall, I would not get back the rental to cover the cost of the house at present (just south of Dublin), but I am in two minds about what to do, If I rented it out I would have to pay CGT on a lot of money ie original price 10 years ago 65000 Euro now 450000 euro so 20% of that difference is a lot to loose.. thanks for the advice I will investigate some more..

I think that the downturn you mentioned would have to be very serious for it to really affect you, unless an extra 100 or 200 a month would really hurt you to pay off. I wouldnt really be afraid of that, the odds are slim!

conor_mc

Deleted User wrote:

I think that the downturn you mentioned would have to be very serious for it to really affect you, unless an extra 100 or 200 a month would really hurt you to pay off. I wouldnt really be afraid of that, the odds are slim!

A downturn may not affect the profit too much (i.e. bought 65k, now worth 450k) but it is a serious risk to the liquidity of the asset when it becomes very difficult to offload in a falling market, not to mention the effect of a long period of stagnation in terms of inflation-adjusted house prices, which even the EA economists see beginning as soon as 2007/2008 (inflation@2-3%, estimated house price growth@3%). And what if the OP has to cover the mortgage repayments during a period of non-tenancy - how comfortable are they with that prospect? The rental market is very soft at the moment so this is definitely a risk.

I think you underestimate the risks in property in general, not to mention here in "we've never had it so good" Ireland.

ircoha

xpression wrote:

Hello, First time post here,

1 I however have been working and living in the area of my first house

2 Will I have to pay CGT on my first house ?

Any Ideas,

Thanks

Re 1 have u been living in the first house, it is not clear.

If so and it has never been let since u bought it then no CGT is payable

xpression

Yes I have been living in my first house in dublin,

Just wondering now if i rent a room under the rent a room scheme would i have to pay CGT on selling the house?

RainyDay

xpression wrote:

Just wondering now if i rent a room under the rent a room scheme would i have to pay CGT on selling the house?

Provided you meet the conditions of the rent-a-room scheme (including living in the house yourself and keeping rental income under the €7k (approx) threshold), there is no CGT impact.