CGT - sale of main private residence

kbear24

Hello! I’m looking for some insight regarding the Principal Private Residence (PPR) relief.

If I understood the Revenue page correctly - when selling the main residence, in order to avail of CGT exemption, one must be living in it as the main residence and to be using it as a home. There is also a note stating that “the last 12 months of ownership of a PPR is considered to be included in your period of occupation”.

My questions are:

Does that 12 months countdown start from the closing date of acquiring the second property (which will then become the main private residence)?

Or does the 12 months start after moving into the acquired second property?

What happens (CGT wise) if the acquired second property is not ready to move in within the 12 months timeframe of acquiring it?

Could I still avail of the PPR relief (CGT exemption) if I sell the main private residence after 12 months of acquiring the second place (whereby I’m still living in the main residence in the interim)?

I have been living in this main residence since 2018.

namenotavailablE

The 12 month period is counted backwards from the date that you sell the property (i.e. no longer own it)- so if you sell it on 1st March 2024, the 12 months runs from 1st March 2023 to 28th February 2024.

The CGT exemption is calculated by multiplying your gain by the fraction 'Length of period of occupation of the property/ Length of period of ownership of the property', so that addresses your query regarding availing of the relief if it takes a long time to sell after moving out. The period of occupation includes the final 12 months of ownership- this basically allows you to move into a new property while trying to sell it.

Using simplified data, assuming you owned the property on 1 January 2018 and sold it on 31st March 2024, the duration of ownership is 75 months. If you lived in it through to the end of June 2022 (and moved to a new house), that's 54 months actual occupancy of the house. You can add on an additional 12 months, being the period 1 April 2023 to 31 March 2024 (final 12 months of ownership) to give 66 months of occupancy of the house. If the gain on the sale (sales proceeds net of solicitor and auctioneer costs minus original purchase price including any solicitor costs or stamp duty) was say €100,000, you'd be exempt on €100,000 x 66/75 = an exemption of €88,000, thus a taxable gain of €12,000.

From the €12,000, you can deduct an annual exemption of €1270 (assuming that it hasn't already been used against any other gains) to give a taxable gain of €10730. The tax rate is 33% of this.

kbear24

Thank you for your insight on this, it is indeed very helpful!

So that I understood from what you mentioned based on closely my current situation:

If I owned the first property from April 2018 - present (69 months counting) and haven't moved into the second property yet (which I acquired in May 2023 and under renovation). Let's say I finally move into it next month, Feb 2024 and successfully sold the first property by July 2024. My CGT calculation would be "70/75 x 100,000", an exemption of 93,333, thus, a taxable gain of 6,666 and minus the 1270 annual exemption to give a final taxable gain of 7936 of which 33% is the tax amount to pay?

I guess I wasn't sure if there would be any impact (tax wise when selling) of me still living in the first property despite acquiring the second property back in May 2023 (which I haven't moved in yet due to heavy renovation).

kbear24

https://www.boards.ie/discussion/comment/121560826#Comment_121560826

Thank you for your insight on this, it is indeed very helpful!

So that I understood from what you mentioned based on closely my current situation:

If I owned the first property from April 2018 - present (69 months counting) and haven't moved into the second property yet (which I acquired in May 2023 and under renovation). Let's say I finally move into it next month, Feb 2024 and successfully sold the first property by July 2024. My CGT calculation would be "70/75 x 100,000", an exemption of 93,333, thus, a taxable gain of 6,666 and minus the 1270 annual exemption to give a final taxable gain of 7936 of which 33% is the tax amount to pay?

I guess I wasn't sure if there would be any impact (tax wise when selling) of me still living in the first property despite acquiring the second property back in May 2023 (which I haven't moved in yet due to heavy renovation).

namenotavailablE

That calculation looks right apart from the €7936 value (you've added the 1270 rather than deducted it!)- it should be €6,666 - €1,270 = €5396 taxed at 33%.

Geuze

As long as you live in house A up until you sell it, there is no CGT on any gain made from selling house A.

It doesn't matter how many other houses you own.

April 2018 = bought house A

lived in house A all the time - this is what is important

Feb 2024 = move out of house A

July 2024 = sell house A

Those final three months are considered as occupation, so there is no CGT due.

The other house under renovation is not relevant to the discussion.

Geuze

“the last 12 months of ownership of a PPR is considered to be included in your period of occupation”.

Feb 2024 = move out of house

July 2024 = sell house

So for the 12 months before July 2024, you are deemed to be living in this house.

So no CGT due.

The system is designed to give people time to move out before they sell, and still keep the CGT relief.

namenotavailablE

Geuze is correct.

The few months between moving out and sale are treated as periods of occupation - another D'oh! moment for me and I can't even think what I was doing to justify the error.