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solicitor wrong calculation on capital gains??

  • 25-11-2010 12:18PM
    #1
    analbeads
    Closed Accounts Posts: 74 ✭✭


    my father is signing over the old family home to me (my parents built a new house). the house was bought at £IR 8200 in 1989 and is now valued at valued at 45,000 euro.
    when we had the capital gains tax calculated it would be over 6,000 euro!! how can it be this much?
    how can £IR 8200 be only 13,004 euro after 20 years of inflation?

    it was the family home form 1989 up untill 18months ago but that isnt taking into account! dose this seem right?


Comments

  • #2
    crabfeet
    Closed Accounts Posts: 42 ✭crabfeet


    analbeads wrote: »
    my father is signing over the old family home to me (my parents built a new house). the house was bought at £IR 8200 in 1989 and is now valued at valued at 45,000 euro.
    when we had the capital gains tax calculated it would be over 6,000 euro!! how can it be this much?
    how can £IR 8200 be only 13,004 euro after 20 years of inflation?

    it was the family home form 1989 up untill 18months ago but that isnt taking into account! dose this seem right?


    Are you sure you are not mixing it up wit Capital Acquisitions Tax. If the house was a family home for so long only about 4% of the gain would be taxable.
    Are your figures correct. 8,200 in 1989 would have been very cheap. I paid £80,000 in 1988.


  • #3
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    I'm not making any comment on the values being quoted.

    In these circumstances CGT works by indexing the 1989 cost, deducting that figure from the current valuation, apportioning the gain between the period when it was and wasn't a private residence, and taxing the non-private residence portion at 25%.

    Indexation from 1989 to 2010 is either 1.553 or 1.503 depending on whether the purchase was before or after 5 April 1989. Indexation stopped at 31 December 2002 so the last eight years aren't allowed.

    So the lawyer's calculation of the gain is about right - there are probably some incidental costs in the calculation as well.

    His subsequent calculation of the tax looks to be off the wall.


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