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Question on capital gains tax

  • 03-12-2021 8:10pm
    Registered Users Posts: 113 ✭✭ superd1978

    Hi guys,

    Im wondering can someone advise me on a cgt question.

    Ive had a property as my principal residence for the past 4.5 years.

    I want to move to a new home, and rent this house out for 12 months, and after the 12 months sell the property. So approx 5.5 years total ownership. This is to allow me move into my new property and not be under pressure with the sale in the background. Yes I’m pretty lucky to be in this position!

    Can I get some advise on the cgt here, and the formulas involved?

    Much appreciated.


  • Registered Users Posts: 206 ✭✭ Bold Abdu

    There would be no CGT if you sell within 12 months.

    A simplified calculation would be as follows:

    Cost €150K

    Sold for €250K

    Gain €100K

    PPR Relief €100K

    Taxable Gain = 0

    PPR relief is 100% of the gain as the property is deemed to be your PPR for the full period of ownership. If you sold the property in 5.5 yrs time i.e. total period of ownership being 10 years, then it would be deemed to be your PPR for 5.5 years (4.5 + 1). Therefore PPR Relief would be 5.5/10 = €55K......= €45K taxable.

    Hope that makes sense

  • Registered Users Posts: 113 ✭✭ superd1978

    Thanks a million. Im going to try break that down closer to my scenario.

    • Initial cost 350K
    • Sold for 450k = Gain of 150k
    • Lived in it for 5 years
    • Rented for 1 year.
    • Total ownership 6 years.
    • 5/6 = .83 or 83% = PPR relief
    • 17% of 150k taxable at CGT rate of 33% = €8415

    Would that seem accurate?

  • Registered Users Posts: 78,313 ✭✭✭✭ Victor

    "There would be no CGT if you sell within 12 months." - is it 12 months or within the same tax year?

    "Initial cost 350K Sold for 450k = Gain of 150k" - you're out by €50,000 there. Note that you can deduct your costs from the sale price.

  • Registered Users Posts: 124 ✭✭ Hontou

    Don't forget about your personal exemption of €1270 and you may have allowable expenses too.

  • Registered Users Posts: 1,164 ✭✭✭ LawBoy2018

    Sales Proceeds (450K) - Base Cost (350K) = Gain (100K)

    Gain x 33% CGT = 33K

    S.604 TCA provides that the last 12 months of ownership shall be deemed to have been occupied by the property owner. (I assumed that you rented out the property during your final year of ownership)

    33K x Aggregate of the periods of use and deemed use as a residence(6 years)/Entire period of ownership (6 years) = 100% relief.

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  • Registered Users Posts: 113 ✭✭ superd1978

    Guys, thanks a million for the insight. Much appreciated.

    I wasnt aware of the 12 month law.

  • Registered Users Posts: 1,138 ✭✭✭ Del Griffith

    So, I'm abroad now, house I've owned since 2006 has been rented out now for 1 year.

    If I sell and want to avoid CGT, I've to move back in for 12 months - is that right?

  • Registered Users Posts: 512 ✭✭✭ MakersMark

    Don't forget that you'll very likely be trying to sell a house with tenants in situ.

  • Registered Users Posts: 631 ✭✭✭ houseyhouse

    No. The last 12 months are not subject to CGT whether you’re living there or not. That doesn’t affect whether you pay CGT for the previous years. In your case it looks like your would for the year it was let. If you own it from 1 jan 2006 - 31 dec 2022 for example and it was let out for all of 2021 only then you would pay CGT on 1/17th of the increase in value.

  • Registered Users Posts: 1,138 ✭✭✭ Del Griffith

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