Calculating CGT

Hannaho

My partner has just received an offer on his house of 535k- he is unsure whether to take it due to CGT. He bought the house in 2008 for 450k. He rented it for 8 years. He did it up at a cost of 175k and lived in it from 2016 to current. Unfortunately, due to issues with arthritis and the house now being way too big for him, he needs to downsize to a bungalow or ground floor apartment. He had rented out some of the rooms under rent a room scheme, but as well as the stairs becoming a problem, he does not want to share his house with anyone again. He will lose quite a significant amount on the house, can any of the 175k he spent on the house in 2016 be offset against the time this house was rented. What roughly would his CGT tax be on this property.

85k gain. 50ish % PPR relief. Annual exemption. Ballpark €13-14k CGT without considering the enhancement costs of €175k (the type of the expenditure will determine if they cam be used in the calculations).

Tell him to pay a visit to an accountant, well worth the investment here.

Hannaho

Thanks , Downtheroad, that's really helpful. What do you mean the type of expenditure will determine if it can be used in the calculations? The expenditure was for rewire, replumb, insulation, building of an extension - this was done after the rental period and before he moved back into the property. He feels really bad about losing this money, but he needs to move, however, it would help a little if he could offset this against his CGT bill.

Xander10

https://www.boards.ie/discussion/comment/121043923#Comment_121043923

That should qualify as enhancement expenditure

Hannaho

Thanks, Xander, that's helpful and good news for him.

Marcusm

https://www.boards.ie/discussion/comment/121043923#Comment_121043923

In the abstract, these expenses should all qualify as “enhancement expendiutre” meaning that no gain arises irrespective of whether rented or owner occupied. The question is whether it is capital (enduring expenditure) and whether it is reflected in the property sold. Eg a fridge might be capital but if you take it away it is not included. If you built an extension, it is capital expenditure and unless torn down prior to sale,, it is reflected in the property sold.

Hannaho

Thanks for your explanation, Marcus. I'm not sure though what you mean that all these expenses should be claimable in the 'abstract.' I certainly hope my partner's extension won't be torn down! It has all the certification etc.

DFB-D

https://www.boards.ie/discussion/comment/121054331#Comment_121054331

Rewires are generally not enhancement expenditure.

The wiring was considered part of the basecost so a replacement of same is not an enhancement.

The extension is an enhancement, but if subsequently the extension was taken down, you cannot claim it as an enhancement as the consideration you recieve as part of the sale will not be for the non existent extension. Hope that makes sense.