2011-2014 property cgt exemption

jwright118

Hi,

I've just sold a rental property which I bought in may 2013. I never lived in the property at all. I, like a lot of other people were under the impression that the capital gains exemption on properties bought from 2011-2014 had been extended to rental properties, to ignite the property market for investors. Initially, it was exempt if held for 7 years, then budget 2018 reduced that to 4 years.

I called revenue yesterday to ask if I have to document the gain, knowing it needs to be in next years tax return. They said the gain was not exempt as it was not my ppr, which came as a shock as it will take away a sizeable amount of funds being used to trade up apartments.

Can anybody clarify if rental properties are included in the exemption? If they aren't I'm not sure what the point of the whole exemption bill was for, as pprs were always exempt from gains tax. I've read multiple articles, which appear to confirm "investors " gain from it, ie landlords..

Fian

jwright118 wrote: »

Hi,

I've just sold a rental property which I bought in may 2013. I never lived in the property at all. I, like a lot of other people were under the impression that the capital gains exemption on properties bought from 2011-2014 had been extended to rental properties, to ignite the property market for investors. Initially, it was exempt if held for 7 years, then budget 2018 reduced that to 4 years.

I called revenue yesterday to ask if I have to document the gain, knowing it needs to be in next years tax return. They said the gain was not exempt as it was not my ppr, which came as a shock as it will take away a sizeable amount of funds being used to trade up apartments.

Can anybody clarify if rental properties are included in the exemption? If they aren't I'm not sure what the point of the whole exemption bill was for, as pprs were always exempt from gains tax. I've read multiple articles, which appear to confirm "investors " gain from it, ie landlords..

It sounds like the person in revenue was confusing the temporary CGT exemption you are relying on with teh permanent PPR relief.

If it was a condition of the 2011-20relief that the property be your PPR the scheme would be entirely redundant, since PPR have been and remain exempt from CGT with no restriction on year of purchase or how long they need to be retained.

ross2010

I would speak to a tax advisor to be certain, but looks to me like you are exempt.

This is from Grant Thornton website:
An exemption from capital gains tax was introduced in the Finance Act 2012 which provides for an exemption from capital gains tax on the disposal of a property purchased under an unconditional contract dated between 7 December 2011 and 31 December 2014. The relief applies to both residential and commercial property and to property held by individuals and corporates.

There is a full exemption from CGT on the disposal of the property where it is held for exactly seven years from the date of acquisition. There is proportionate relief where the property is held for any period longer than seven years with the relief was lost in its entirety if the property is sold during the initial seven year acquisition period.

The requisite holding period has been reduced from 7 years to 4 years. The measure has created a three year period (i.e. years 4 to 7) in which the property can be sold and benefit from a full exemption whereas if held longer than 7 years, only proportionate relief is available.

Finance Bill 2017 has clarified that this new rule will only apply to disposals made on or after 1 January 2018. Subject to meeting the other conditions of the relief, a property purchased prior to 1 January 2014 may be eligible for a full exemption from CGT where it is sold on or after 1 January 2018.

It is crucial that the timing of disposals eligible for this relief are managed correctly so that the relief is not inadvertently lost.

Anyone who acquired a property to avail of this relief should review their property portfolios with particular reference to retention strategy and the acquisition date and it is recommended that advice is sought from a professional adviser prior to any disposal

tanit

Definitely talk with a tax advisor, but I think you need to hold the property for the full 7 years, otherwise it does not apply. And if you hold it for more than seven there's a clawback in the relief.

You should talk with a tax advisor

Fian

tanit wrote: »

Definitely talk with a tax advisor, but I think you need to hold the property for the full 7 years, otherwise it does not apply. And if you hold it for more than seven there's a clawback in the relief.

You should talk with a tax advisor

This was teh original scheme but was subsequently reduced to 4 years. if you hold for more than 7 you get releief for 7/x of the gain, where x is the number of years held. Similar to how PPR relief works.

jwright118

Dropped into a tax advisor, who reiterated that the sale is indeed exempt. As expected, they said the scheme would be pointless if it wasn't extended to investment properties.