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Selling a property after few years: capital gain tax?

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  • 18-10-2018 1:25pm
    #1
    pasquale83
    Registered Users Posts: 477 ✭✭


    Hi.

    I'm thinking about selling the property I bought 3 years ago. The property is rented atm.

    Just wondering if I will have to pay any CGT on a possible capital gain?

    Any other taxes?

    Thank you for your help!


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    #2
    DubCount
    Registered Users Posts: 1,066 ✭✭✭DubCount


    If you have lived in the property as your PPR for a portion of the 3 years, then the answer could be quite complicated.

    If it has never been a PPR, then it will be subject to CGT.

    Obviously, you are subject to IT, PRSI and USC on rental income, and the purchaser must pay stamp duty on the purchase.


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    #3
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    DubCount wrote: »
    If you have lived in the property as your PPR for a portion of the 3 years, then the answer could be quite complicated.

    If it has never been a PPR, then it will be subject to CGT.

    Obviously, you are subject to IT, PRSI and USC on rental income, and the purchaser must pay stamp duty on the purchase.

    yes, it used to be my PPR from the purchase in May 2015 till Sept 2017 when I relocated abroad. I started to rent it from July 2018.

    Of course I will pay taxes on the rental income next year (standard rate).

    Would you be able to tell me with the data I reported above if CGT is owed? What is the general role about it?

    Thanks


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    #4
    Explosive_Cornflake
    Registered Users Posts: 2,105 ✭✭✭Explosive_Cornflake


    It should be applied as a percentage of the time it wasn't a PPR.
    Roughly 2/3 will be exempt and 1/3 of the gain would be liable for CGT.


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    #5
    august12
    Registered Users Posts: 1,275 ✭✭✭august12


    pasquale83 wrote:
    Of course I will pay taxes on the rental income next year (standard rate).

    Have you notified revenue it's rented, if there is a mortgage and you are claiming tax relief on the interest, this no longer applies if rented and they will claw back the relief.


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    #6
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    august12 wrote: »
    Have you notified revenue it's rented, if there is a mortgage and you are claiming tax relief on the interest, this no longer applies if rented and they will claw back the relief.

    Never got a tax relief on my mortgage interests. I was thinking to claim a deduction from the rental income because of the mortgage. Does it makes sense?


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    #7
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    Explosive_Cornflake wrote: »
    It should be applied as a percentage of the time it wasn't a PPR.
    Roughly 2/3 will be exempt and 1/3 of the gain would be liable for CGT.

    OK thanks. What's the general rule then? From the time it is not my PPR I will pay CGT? regardless it is rented or not?


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    #8
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    august12 wrote: »
    Have you notified revenue it's rented, if there is a mortgage and you are claiming tax relief on the interest, this no longer applies if rented and they will claw back the relief.

    Do you mean this: http://www.citizensinformation.ie/en/housing/owning_a_home/buying_a_home/mortgage_interest_relief.html


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    #9
    august12
    Registered Users Posts: 1,275 ✭✭✭august12


    pasquale83 wrote:
    Never got a tax relief on my mortgage interests. I was thinking to claim a deduction from the rental income because of the mortgage. Does it makes sense?


    You can claim the interest on the mortgage as an expense against rental income, I think the allowable limit is 75% of the interest but you need to registered with the RTB.


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    #10
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    august12 wrote: »
    You can claim the interest on the mortgage as an expense against rental income, I think the allowable limit is 75% of the interest but you need to registered with the RTB.

    yeah sure will do that. thanks.

    This thread is only about the taxes on the proceedings of the sale. need to understand more how this CGT works.

    thank you.


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    #11
    wench
    Registered Users Posts: 1,630 ✭✭✭wench


    pasquale83 wrote: »
    This thread is only about the taxes on the proceedings of the sale. need to understand more how this CGT works.
    At the moment you would owe practically no CGT. You get relief for the time it was your home, plus 1 year.
    So you would only owe for the fraction from Sept 2018 to when you sell.

    If for example you held it for another 3 years, half of any gain would be taxed (less any expenses).


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    #12
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    wench wrote: »
    At the moment you would owe practically no CGT. You get relief for the time it was your home, plus 1 year.
    So you would only owe for the fraction from Sept 2018 to when you sell.

    If for example you held it for another 3 years, half of any gain would be taxed (less any expenses).

    Alright, understood, thanks.


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    #13
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    pasquale83 wrote: »
    DubCount wrote: »
    If you have lived in the property as your PPR for a portion of the 3 years, then the answer could be quite complicated.

    If it has never been a PPR, then it will be subject to CGT.

    Obviously, you are subject to IT, PRSI and USC on rental income, and the purchaser must pay stamp duty on the purchase.

    yes, it used to be my PPR from the purchase in May 2015 till Sept 2017 when I relocated abroad. I started to rent it from July 2018.

    Of course I will pay taxes on the rental income next year (standard rate).

    Would you be able to tell me with the data I reported above if CGT is owed? What is the general role about it?

    Thanks

    No cgt based on renting from Jul 18 (subject to one condition being fulfilled)

    You might speak to an financial advisor on this, you could maximise your income by selling next year.


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    #14
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    davindub wrote: »
    No cgt based on renting from Jul 18 (subject to one condition being fulfilled)

    You might speak to an financial advisor on this, you could maximise your income by selling next year.

    thank you for your reply. do you have any links?


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    #15
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Don't you have to get your tenants out of the property first?


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    #16
    Zero Point
    Registered Users Posts: 44 ✭Zero Point


    Did you move abroad due to a transfer from a job within a company you were working for here or for seeking work because there were no suitable job opportunities where you lived? I think there may be grounds for claiming a CGT exemption when selling for those reasons but you would need to seek clarification around it now that it's rented out and earning income from it.


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    #17
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    Sorry on the phone so this link may not be correct https://www.google.ie/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03.pdf&ved=2ahUKEwiUnsDmypDeAhUQWsAKHeytBP0QFjALegQIBBAB&usg=AOvVaw1oAIBlgNWnHbOODG1s-3pd

    If not google disposal of principle private residence. There are parts of the legislation that applies.


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    #18
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    Claw Hammer wrote: »
    Don't you have to get your tenants out of the property first?

    yes of course. but better to know where I'm heading if I sell the house. I like to plan :)


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    #19
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    davindub wrote: »
    Sorry on the phone so this link may not be correct https://www.google.ie/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03.pdf&ved=2ahUKEwiUnsDmypDeAhUQWsAKHeytBP0QFjALegQIBBAB&usg=AOvVaw1oAIBlgNWnHbOODG1s-3pd

    If not google disposal of principle private residence. There are parts of the legislation that applies.

    thank you davindub :)


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    #20
    pasquale83
    Registered Users Posts: 477 ✭✭pasquale83


    Zero Point wrote: »
    Did you move abroad due to a transfer from a job within a company you were working for here or for seeking work because there were no suitable job opportunities where you lived? I think there may be grounds for claiming a CGT exemption when selling for those reasons but you would need to seek clarification around it now that it's rented out and earning income from it.

    Thanks Zero Point. I will check it out. I relocated because I got another job somewhere else but the decision was 100% on me.


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