Historical Error in filing CGT Return for my dad?

Warper

When training as an accountant approx 12 years ago i filed a CGT Return for my dad. He was selling a plot of land at the back of our principal private residence. Enough for one big house approx less than an acre. Our house/garden isnt that big a bungalow approx 1/4 acre or less. I filed the return. He got 100k approx and paid tax of 18k approx, money long gone now.

Now i have heard of the principal private residence relief so can he get a refund of the CGT paid or have i left it too late?

barneystinson

Warper wrote: »

When training as an accountant approx 12 years ago i filed a CGT Return for my dad. He was selling a plot of land at the back of our principal private residence. Enough for one big house approx less than an acre. Our house/garden isnt that big a bungalow approx 1/4 acre or less. I filed the return. He got 100k approx and paid tax of 18k approx, money long gone now.

Now i have heard of the principal private residence relief so can he get a refund of the CGT paid or have i left it too late?

It's too late by a good few years.

On the other hand, he could probably sue you for it...

Warper

barneystinson wrote: »

It's too late by a good few years.

On the other hand, he could probably sue you for it...

Best not mention it to him so - goddamn

Mr. Incognito

This is why Property Threads are banned.

People that don't know giving advice that is wrong that costs thousands of Euro

You can't claim any taxes back more than 4 years with the exception of double taxation treaty relief.

And how, if you are working as an accountant for 10 years or so have you only twigged this now?

dbran

Hi

If I sell part of my garden to a builder, who builds a house on it, am I liable to pay capital gains tax?

Yes. Normally when an individual disposes of his/her principal private residence and a garden or grounds of up to one acre (excluding the site of the house), then any gain on such a disposal is exempt from capital gains tax. However, where a dwelling house or garden/part of a garden, is sold for greater than its current use value, then this constitutes the sale of development land and principal private residence relief will apply only to the current use value. In general terms the difference between the consideration and the current use value is liable to capital gains tax. Development Land rules do not apply to disposals where the total consideration from such disposals does not exceed €19,050.

Example:

An individual disposes of part of his garden for €40,000. The current use value of the site is €2,000. The entire property originally cost €100,000. The market value of the property after the sale of the site is €360,000.

Step 1. Calculate the gain arising using the part disposal rules and ignoring any development land implications -

Proceeds are equal to €40,000.

Original Cost of €100,000 x [€40,000 / ( €360,000 + €40,000)] = €10,000

Index of (say) 1.5 i.e. €10,000 x 1.5 = €15,000

Gain is equal to €25,000.

Step 2: Calculate a notional gain, as if the site was sold for current use value. This is the principal residence relief -

Proceeds are equal to €2,000.

Original Cost of €100,000 x [€2,000 / ( €360,000 + €2,000)] = €552

Index of (say) 1.5 i.e. €552 x 1.5 = €828

Principal Private Residence Relief is equal to €1,172.

Step 3:

Deduct the Principal Private Residence Relief of €1,172 from the Gain of €25,000. The Chargeable Gain is equal to €23,828

On a subsequent disposal of the remaining property, the base cost of the land disposed of, will be the original cost less the base cost allocated to this disposal. i.e. €100,000 - €10,000 = €90,000

So great news, you probably did indeed owe some CGT on the disposal

dbran

mozattack

The post immediately above is correct and I have seen this come up numerous times in an audit situation and there can be great fun arguing what the value of the house was post sale of the land!

There is famous case law on this, I think the main case is Varty v Lyons.