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Capital gains tax

  • 14-03-2018 9:55pm
    #1
    Brego888
    Registered Users, Registered Users 2 Posts: 1,321 ✭✭✭


    I'm confused on this and despite reading revenue regulations im no further along and would appreciate some help. I'll give two scenarios:

    1) I buy property B but I'm in a chain and wait to sell property A before I can move to property B. Do I pay capital gains on property A?

    2) I buy property B and move in but it takes let's say 10 months to sell property A. Do I pay capital gains tax on property A? Or is it dependent on whether I've rented out property A in the meantime?


Comments

  • #2
    Peregrinus
    Registered Users, Registered Users 2 Posts: 26,987 ✭✭✭✭Peregrinus


    Is it the principal private residence CGT exemption that you are concerned about? Are property A and property B, successively, your homes?


  • #3
    Brego888
    Registered Users, Registered Users 2 Posts: 1,321 ✭✭✭Brego888


    Peregrinus wrote: »
    Is it the principal private residence CGT exemption that you are concerned about? Are property A and property B, successively, your homes?

    To answer your first question I think yes but I'm really not sure. And no I only own property A, my scenarios are more hypothetical as I plan on moving and selling in the next year.
    I guess I'm looking to know essentially are there capital gains tax penalties for selling your house and is this dependent on it being your primary residence at the time of sale?


  • #4
    Peregrinus
    Registered Users, Registered Users 2 Posts: 26,987 ✭✭✭✭Peregrinus


    The CGT consequences of selling House A are unaffected by whether, or when, you buy another house.

    If House A is you "principal private residence" throughout the period of your ownership, when you sell it there is no CGT to pay.

    It sometimes happens that people move out a few months before selling; that's OK. Even if you haven't actually been living there for up to 12 months before the date of sale, the house will still be treated as your PPR. So if you buy House B, move into it, put House A on the market and sell it, say, 4 months later, there'll still be no CGT.

    There's only a problem if the period during which you don't live there is more than 12 months. Even then, its a limited problem. If you own the house, say, for 11 years, and it was your PPR for 9 years, then when you sell it 9/11ths of the capital gain will be exempt, and 2/11ths will be taxed.

    And the same treatment will apply to House B. You buy it, you move in, it becomes your PPR. When you eventually sell it, presumably some years in the future, if it has been your PPR throughout, there will be no CGT to pay.


  • #5
    Brego888
    Registered Users, Registered Users 2 Posts: 1,321 ✭✭✭Brego888


    Ah very good, thanks for the reply.


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