Capital Gains Exemption - Can anyone clarify please!

IamCait

Hi All, I've been onto some people about this topic before and I can't seem to get a definite answer...not even my bloody accountant is sure so I'm hoping someone on here is in the same position.

Basically here's my situation, in April 2012 I bought a 2 bed apartment and have rented it from day one, which then I moved into it of April last year...2016.

I also purchased another 2 bed property in November 2013 and have been renting ever since.

My question to you is firstly, do I qualify for the 7 year exemption rule on either one or two of the properties, if so does this mean if both properties are sold at the 7 year mark regardless if rented out and only one apartment now being my PPR, will I be fully exempt on profits? thanks a mill.

IamCait

IamCait wrote: »

................

Basically here's my situation, in April 2012 I bought a 2 bed apartment and have rented it from day one, which then I moved into it of April last year...2016.

............

My question to you is firstly do I qualify for the exemption either one or two of the properties, if so please explain why I do or don't qualify, thanks a mill.

Qualify for the 2012 one on a pro rata basis.

You'll have to cough up 80%

IamCait

Augeo wrote: »

Qualify for the 2012 one on a pro rata basis.

You'll have to cough up 80%

So am I correct in saying because I rented it out, I can only be exempt for 1/5th of the exemption (rented for 4 out of the 5 years of current ownership)...hence your 80% calculation, ( I get charged for 4 of the 5 years )? Also the reason for me not being able to claim anything off the second property is down to it not being my PPR?

IamCait

IamCait wrote: »

So am I correct in saying because I rented it out, I can only be exempt for 1/5th of the exemption (rented for 4 out of the 5 years of current ownership)...hence your 80% calculation, ( I get charged for 4 of the 5 years )? Also the reason for me not being able to claim anything off the second property is down to it not being my PPR?

Yup.............. that is my understanding & logic

http://www.revenue.ie/en/tax/cgt/cgt-faqs.html

Main Exemptions & Reliefs
The following are of some of the main exemptions and reliefs. Additional information on these and others is available in our CGT Booklet – Guide to Capital Gains Tax.

Private Residence pdfPage 15, of CGT Guide (PDF, 471KB), point 5.
Gains made on the disposal of your home together with its gardens or grounds up to an area (exclusive of the site of the residence) of one acre may be exempt. For full relief to apply, you must have occupied the home as your principal private residence throughout your period of ownership or to within 12 months of the date of disposal. Relief may be restricted where the home was not your main residence throughout the period of ownership (other than the final 12 months), where any part of it was used exclusively for the purposes of a trade, business or profession or where it is sold as development land, for example part of the garden (see Disposal of Property).

IamCait

Augeo wrote: »

Yup.............. that is my understanding & logic

http://www.revenue.ie/en/tax/cgt/cgt-faqs.html

Main Exemptions & Reliefs
The following are of some of the main exemptions and reliefs. Additional information on these and others is available in our CGT Booklet – Guide to Capital Gains Tax.

Private Residence pdfPage 15, of CGT Guide (PDF, 471KB), point 5.
Gains made on the disposal of your home together with its gardens or grounds up to an area (exclusive of the site of the residence) of one acre may be exempt. For full relief to apply, you must have occupied the home as your principal private residence throughout your period of ownership or to within 12 months of the date of disposal. Relief may be restricted where the home was not your main residence throughout the period of ownership (other than the final 12 months), where any part of it was used exclusively for the purposes of a trade, business or profession or where it is sold as development land, for example part of the garden (see Disposal of Property).

Yes this is what I was working off. However what is the 7 year rule then? I was under the impression that if held for 7 years you are exempt regardless?

IamCait

IamCait wrote: »

Yes this is what I was working off. However what is the 7 year rule then? I was under the impression that if held for 7 years you are exempt regardless?

To be fair bud I presumed you were going to sell now I thought the exemption you mentioned was the Owner Occupier exemption rather than the capital gains tax relief on disposals of land or buildings acquired in the period commencing on 7 December 2011 and ending on 31 December 2013.

You'll need to hold off until April 2019 & November 2020 to avail of this on your properties

Your accountant doesn't seem overly well versed tbh.

IamCait

Augeo wrote: »

To be fair bud I presumed you were going to sell now I thought the exemption you mentioned was the Owner Occupier exemption rather than the capital gains tax relief on disposals of land or buildings acquired in the period commencing on 7 December 2011 and ending on 31 December 2013.

You'll need to hold off until April 2019 & November 2020 to avail of this on your properties

Your accountant doesn't seem overly well versed tbh.

Apologies i should have mentioned the 7 year rule. So are you saying regardless of whether or not I rented both apartments out, one of them being my PPR, that if both sold in 2019 and 2020 ( after 7 years ) I will be exempt?

IamCait

IamCait wrote: »

Apologies i should have mentioned the 7 year rule. So are you saying regardless of whether or not I rented both apartments out, one of them being my PPR, that if both sold in 2019 and 2020 ( after 7 years ) I will be exempt?

Yup

But if you hold out longer the 7 years again applies pro rata.............. so if you sell in 2022 & 2023 you get 70% relief on any CG

Still, fantastic really

Well done.

filbert the fox

"I can't seem to get a defiant answer"

:eek:

IamCait

Augeo wrote: »

Yup

But if you hold out longer the 7 years again applies pro rata.............. so if you sell in 2022 & 2023 you get 70% relief on any CG

Still, fantastic really

Well done.

Wow really, it's working out as a massive sum, so I've been anxious to get it clarified so I can make the decision to sell at the right point.

That's correct about if held for more than 7 years you are taxable of 7/Y, Y meaning the total number of years there after.

I found a doc just now and everything is easy to understand, I can't see any mention of if rented out only a partial exemption is given, hopefully we are right, here it is.... http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03a.pdf

Ps. Thanks a mill for your advice!

IamCait

IamCait wrote: »

................I can't see any mention of if rented out only a partial exemption is given, hopefully we are right, here it is.... http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03a.pdf

Ps. Thanks a mill for your advice!

The 7 year thing was for investors
The expectation is that it was rented out for the entire time, if PPR for some of that time that doesn't change anything

IamCait

Augeo wrote: »

The 7 year thing was for investors
The expectation is that it was rented out for the entire time, if PPR for some of that time that doesn't change anything

Wow...Augeo you have made me one happy man today!