7 years reduced to 4 for CGT exemption

Fian

Means property bought in 2014 can come to market in 2018, property bought in 2013 can be sold now, without losing the CGT exemption. By 2019 there will be no property tied up by the obligation to hold for a minimum period to avail of CGT exemption.

sk8board

Just to clarify, if you hold for 7 years do you still get 7 years relief and this is a breakout option after 4 years? Thanks

karenalot

Wonder if we will see an increase in properties for sale next year - perhaps landlords or speculators will sell up earlier than expected?

Potentially good news for buyers but bad news for renters as they could be evicted to facilitate the sales. It might also bring some vacant properties and land onto the market.

The_Conductor

karenalot wrote: »

Wonder if we will see an increase in properties for sale next year - perhaps landlords or speculators will sell up earlier than expected?

Potentially good news for buyers but bad news for renters as they could be evicted to facilitate the sales. It might also bring some vacant properties and land onto the market.

Time will tell- however, I suspect the scheme to allow landlords surrender houses in negative equity- will have a far bigger impact that this.

awec

The_Conductor wrote: »

Time will tell- however, I suspect the scheme to allow landlords surrender houses in negative equity- will have a far bigger impact that this.

Didn't see that, got any links?

Fian

sk8board wrote: »

Just to clarify, if you hold for 7 years do you still get 7 years relief and this is a breakout option after 4 years? Thanks

That is my understanding, yes. Legislation will clarify in due course.

The_Conductor

awec wrote: »

Didn't see that, got any links?

Its not in the budget- it was announced by AIB, PTSB and INS- in the same press release that launched David Hall's scheme 2-3 weeks back. We did discuss it in passing here in this forum at the time. Will see if I can find a link.

Discussed in the forum here: http://www.boards.ie/vbulletin/showthread.php?p=104820353

Stheno

Does this apply only to non pprs?

I thought pprs were exempt from cgt?

handlemaster

Is it in the budget or not... any links ???

wordofwarning

Stheno wrote: »

Does this apply only to non pprs?

I thought pprs were exempt from cgt?

PPRs are tax exempt. During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

myshirt

wordofwarning wrote: »

PPRs are tax exempt. During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

It would be exempt for any gains that accrued during the 7 year period, not outrightly exempt.

For example if you held it for 10 years, not all the gain would be exempt.

sk8board

As someone who took advantage of this scheme for 3-bed family rentals, I don’t see myself selling after 4 years if house prices continue to rise - not until my 7 years runs out anyway.
Also, if there was to be any stock market correction next year (or even just underperform the property market), coupled with a continuing crap bond markets and deposit interest rates, then you can be certain that this break clause after 4 years will be worthless.

adam88

wordofwarning wrote: »

PPRs are tax exempt. During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

If you hold it for longer e.g. 10 years and make a sizeable profit or gain on the house Are you still exempt from cgt for the full amount of do you only get a pro-rata amount I.e. 7/10th or 4/10th

sk8board

wordofwarning wrote: »

During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

It’s the oddest scheme in retrospect, but in 2012 it was mainly cash buyers in the market, and this scheme attracted a lot of money out of deposit bank accounts. It was a pretty easy decision if I remember correctly.
It wasn’t actually a scheme that was advertised much though - I’m not sure how many actually took advantage of it - it lasted just over 13 months, in a low volume market, and you have to exclude all the PPR sales

sk8board

adam88 wrote: »

If you hold it for longer e.g. 10 years and make a sizeable profit or gain on the house Are you still exempt from cgt for the full amount of do you only get a pro-rata amount I.e. 7/10th or 4/10th

It’s pro-rata - e.g. if the market climbs for 7 years then levels out for 3, you are still only exempt for 7/10 of the total gain over the period.
Likewise if you held the property for 20 years, only 7/20 of the total gain would be exempt.

Fian

sk8board wrote: »

It’s pro-rata - e.g. if the market climbs for 7 years then levels out for 3, you are still only exempt for 7/10 of the total gain over the period.
Likewise if you held the property for 20 years, only 7/20 of the total gain would be exempt.

If you sell after 6 years and 10 months however you will not have any pro rata allocation of gain. This is significant since until this change you were obliged to hold for 7 years before you sold, you then had 7 years exemption but inevitably even if you put on the market immediately you were likely to slip into an eight year and i expect you would have faced a a bill for 1/8 of the CGT.

adam88

So the 7 years had now changed to 4 years. I bought my second property house in 2013. Does this mean my exemption is now over and if I sell next year which will I be paying 1/5 of cgt

sk8board

adam88 wrote: »

So the 7 years had now changed to 4 years. I bought my second property house in 2013. Does this mean my exemption is now over and if I sell next year which will I be paying 1/5 of cgt

I assume they can’t renege on the final 3 years of the relief, so you’d pay no CGT if you sold this year, next year or the year after.
It seems to me that this is simply a break clause, which you don’t have to go for.

There’s probably plenty people with €150k gains in their back pocket over the past 4 years who would be happy to cut and run.
Personally im only 3 years in.

ted1

The_Conductor wrote: »

karenalot wrote: »

Wonder if we will see an increase in properties for sale next year - perhaps landlords or speculators will sell up earlier than expected?

Potentially good news for buyers but bad news for renters as they could be evicted to facilitate the sales. It might also bring some vacant properties and land onto the market.

Time will tell- however, I suspect the scheme to allow landlords surrender houses in negative equity- will have a far bigger impact that this.

There’s not many properties in any of the cities that are in negative equity . It’s nearly ten years since the crash , so between mortgage pay down and rising prices most people are covered

hometruths

ted1 wrote: »

There’s not many properties in any of the cities that are in negative equity . It’s nearly ten years since the crash , so between mortgage pay down and rising prices most people are covered

Plenty of people have not bothered to pay their mortgages over the last 7/8 years - they're still deep in negative equity. Probably no problem as they'll get a deal.

DL Man

Hi,
I bought my invest property in mid 2014 and I am selling it this year.
Will I be cgt exempt given that this will be five and a half years ownership?

Also, do you know how I get about regularising this with revenue. Is there a special form that covers this exemption that should be submitted?

Thanks.

august12

DL Man wrote: »

Hi,
I bought my invest property in mid 2014 and I am selling it this year.
Will I be cgt exempt given that this will be five and a half years ownership?

Also, do you know how I get about regularising this with revenue. Is there a special form that covers this exemption that should be submitted?

Thanks.

My understanding is, yes you are exempt if you acquired between 7th dec, 2011 and 31st dec. 2014, the requisite holding period has been reduced from 7 years to 4 years . The measure has created a 3 year period i.e years 4 to 7 in which the property can be sold and benefit from a full exemption . This rule applies from 1st Jan 2018, I got this info from Grant Thornton website, a google search will give you more info, not sure re CGT return,

jazzyt

Hi. Just wondering could someone elaborate on what exactly “acquired” refers to? Would this include inheriting a property or just purchasing a property? Myself and my sister were left the family home in my mams will when she passed away in may 2014. We both had our own homes so we have it rented it since then. We are considering selling this year so would we be exempt from Cgt as we are within the 7 year time frame? Property was valued at 110k at inheritance and valued at 215k today. Any help would be greatly appreciated. Thank you.

august12

jazzyt wrote: »

Hi. Just wondering could someone elaborate on what exactly “acquired” refers to? Would this include inheriting a property or just purchasing a property? Myself and my sister were left the family home in my mams will when she passed away in may 2014. We both had our own homes so we have it rented it since then. We are considering selling this year so would we be exempt from Cgt as we are within the 7 year time frame? Property was valued at 110k at inheritance and valued at 215k today. Any help would be greatly appreciated. Thank you.

I'm not sure if you need to have purchased the property, see this info as it mentions both purchased and acquired, difficult to know if acquiring through inheritance qualifies, I would contact Revenue through 'my revenue' account , at least you will have an answer in writing from them.

https://www.grantthornton.ie/insights/factsheets/budget-2018--7-year-relief-capital-gains-tax/

According to this, not eligible, but I would still get a definite answer from Revenue or check the revenue site.

https://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html

jazzyt

Hi. Thanks for your response.

Looks like I’m clutching at straws. Did some digging and it would appear this exemption is not applicable to gifts or inheritances.
But also found a file on the revenue website which states.....“ Where property is acquired from a relative (within the meaning of section 10 TCA 1997), the individual who acquired the property must have paid consideration amounting to at least 75% of the market value of the property at the time it was acquired in order to qualify for relief”

So not sure exactly what that means so I’ll get I. Touch with revenue for clarification. But looks like I will be stumped with a €40k CGT bill of I sell! 😧

jazzyt

jazzyt wrote: »

Hi. Thanks for your response.

Looks like I’m clutching at straws. Did some digging and it would appear this exemption is not applicable to gifts or inheritances.
But also found a file on the revenue website which states.....“ Where property is acquired from a relative (within the meaning of section 10 TCA 1997), the individual who acquired the property must have paid consideration amounting to at least 75% of the market value of the property at the time it was acquired in order to qualify for relief”

So not sure exactly what that means so I’ll get I. Touch with revenue for clarification. But looks like I will be stumped with a €40k CGT bill of I sell! 😧

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03a.pdf

Woshy

jazzyt wrote: »

Hi. Thanks for your response.

Looks like I’m clutching at straws. Did some digging and it would appear this exemption is not applicable to gifts or inheritances.
But also found a file on the revenue website which states.....“ Where property is acquired from a relative (within the meaning of section 10 TCA 1997), the individual who acquired the property must have paid consideration amounting to at least 75% of the market value of the property at the time it was acquired in order to qualify for relief”

So not sure exactly what that means so I’ll get I. Touch with revenue for clarification. But looks like I will be stumped with a €40k CGT bill of I sell! ��

It is probably worth reaching out to a tax accountant. There are things you can write off. I was surprised that the CGT we owed was lower than expected once I had gone through everything with him.

august12

jazzyt wrote: »

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03a.pdf

I've read that and I think it means if house was valued at 200,000 when you acquired it, then in order to qualify for the relief, you would have paid the relative 150,000 i.e. 75% of the value, maybe someone more knowledgeable than me might clarify this.

jazzyt

Woshy wrote: »

It is probably worth reaching out to a tax accountant. There are things you can write off. I was surprised that the CGT we owed was lower than expected once I had gone through everything with him.

Yes I think that would be a good idea. I know we can claim legal fees from when we acquired the house plus If we sell it. Also the estate agent fees. Will be interesting what other hidden expenses we can write off!

jazzyt

august12 wrote: »

I've read that and I think it means if house was valued at 200,000 when you acquired it, then in order to qualify for the relief, you would have paid the relative 150,000 i.e. 75% of the value, maybe someone more knowledgeable than me might clarify this.

That’s kinda what I was thinking too. I will mention it again when we are selling just to make sure.
Thanks!