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7 years reduced to 4 for CGT exemption

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  • 10-10-2017 1:30pm
    #1
    Fian
    Registered Users Posts: 2,187 ✭✭✭


    Means property bought in 2014 can come to market in 2018, property bought in 2013 can be sold now, without losing the CGT exemption. By 2019 there will be no property tied up by the obligation to hold for a minimum period to avail of CGT exemption.


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    #2
    sk8board
    Registered Users Posts: 3,202 ✭✭✭sk8board


    Just to clarify, if you hold for 7 years do you still get 7 years relief and this is a breakout option after 4 years? Thanks


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    #3
    karenalot
    Closed Accounts Posts: 196 ✭✭karenalot


    Wonder if we will see an increase in properties for sale next year - perhaps landlords or speculators will sell up earlier than expected?

    Potentially good news for buyers but bad news for renters as they could be evicted to facilitate the sales. It might also bring some vacant properties and land onto the market.


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    #4
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    karenalot wrote: »
    Wonder if we will see an increase in properties for sale next year - perhaps landlords or speculators will sell up earlier than expected?

    Potentially good news for buyers but bad news for renters as they could be evicted to facilitate the sales. It might also bring some vacant properties and land onto the market.

    Time will tell- however, I suspect the scheme to allow landlords surrender houses in negative equity- will have a far bigger impact that this.


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    #5
    awec
    Administrators Posts: 53,418 Admin ✭✭✭✭✭awec


    The_Conductor wrote: »
    Time will tell- however, I suspect the scheme to allow landlords surrender houses in negative equity- will have a far bigger impact that this.

    Didn't see that, got any links?


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    #6
    Fian
    Registered Users Posts: 2,187 ✭✭✭Fian


    sk8board wrote: »
    Just to clarify, if you hold for 7 years do you still get 7 years relief and this is a breakout option after 4 years? Thanks

    That is my understanding, yes. Legislation will clarify in due course.


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    #7
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    awec wrote: »
    Didn't see that, got any links?

    Its not in the budget- it was announced by AIB, PTSB and INS- in the same press release that launched David Hall's scheme 2-3 weeks back. We did discuss it in passing here in this forum at the time. Will see if I can find a link.

    Discussed in the forum here: http://www.boards.ie/vbulletin/showthread.php?p=104820353


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    #8
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Social & Fun Moderators, Society & Culture Moderators Posts: 51,687 Mod ✭✭✭✭Stheno


    Does this apply only to non pprs?

    I thought pprs were exempt from cgt?


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    #9
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    Is it in the budget or not... any links ???


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    #10
    wordofwarning
    Closed Accounts Posts: 697 ✭✭✭wordofwarning


    Stheno wrote: »
    Does this apply only to non pprs?

    I thought pprs were exempt from cgt?


    PPRs are tax exempt. During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.


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    #11
    myshirt
    Registered Users Posts: 5,245 ✭✭✭myshirt


    wordofwarning wrote: »
    PPRs are tax exempt. During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

    It would be exempt for any gains that accrued during the 7 year period, not outrightly exempt.

    For example if you held it for 10 years, not all the gain would be exempt.


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    #12
    sk8board
    Registered Users Posts: 3,202 ✭✭✭sk8board


    As someone who took advantage of this scheme for 3-bed family rentals, I don’t see myself selling after 4 years if house prices continue to rise - not until my 7 years runs out anyway.
    Also, if there was to be any stock market correction next year (or even just underperform the property market), coupled with a continuing crap bond markets and deposit interest rates, then you can be certain that this break clause after 4 years will be worthless.


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    #13
    adam88
    Registered Users Posts: 1,599 ✭✭✭adam88


    wordofwarning wrote: »
    PPRs are tax exempt. During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

    If you hold it for longer e.g. 10 years and make a sizeable profit or gain on the house Are you still exempt from cgt for the full amount of do you only get a pro-rata amount I.e. 7/10th or 4/10th


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    #14
    sk8board
    Registered Users Posts: 3,202 ✭✭✭sk8board


    wordofwarning wrote: »
    During the crash, the Government told speculators that if you bought Irish property, it would be exempt from CGT if you held it for 7 years.

    It’s the oddest scheme in retrospect, but in 2012 it was mainly cash buyers in the market, and this scheme attracted a lot of money out of deposit bank accounts. It was a pretty easy decision if I remember correctly.
    It wasn’t actually a scheme that was advertised much though - I’m not sure how many actually took advantage of it - it lasted just over 13 months, in a low volume market, and you have to exclude all the PPR sales


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    #15
    sk8board
    Registered Users Posts: 3,202 ✭✭✭sk8board


    adam88 wrote: »
    If you hold it for longer e.g. 10 years and make a sizeable profit or gain on the house Are you still exempt from cgt for the full amount of do you only get a pro-rata amount I.e. 7/10th or 4/10th

    It’s pro-rata - e.g. if the market climbs for 7 years then levels out for 3, you are still only exempt for 7/10 of the total gain over the period.
    Likewise if you held the property for 20 years, only 7/20 of the total gain would be exempt.


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    #16
    Fian
    Registered Users Posts: 2,187 ✭✭✭Fian


    sk8board wrote: »
    It’s pro-rata - e.g. if the market climbs for 7 years then levels out for 3, you are still only exempt for 7/10 of the total gain over the period.
    Likewise if you held the property for 20 years, only 7/20 of the total gain would be exempt.

    If you sell after 6 years and 10 months however you will not have any pro rata allocation of gain. This is significant since until this change you were obliged to hold for 7 years before you sold, you then had 7 years exemption but inevitably even if you put on the market immediately you were likely to slip into an eight year and i expect you would have faced a a bill for 1/8 of the CGT.


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    #17
    adam88
    Registered Users Posts: 1,599 ✭✭✭adam88


    So the 7 years had now changed to 4 years. I bought my second property house in 2013. Does this mean my exemption is now over and if I sell next year which will I be paying 1/5 of cgt


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    #18
    sk8board
    Registered Users Posts: 3,202 ✭✭✭sk8board


    adam88 wrote: »
    So the 7 years had now changed to 4 years. I bought my second property house in 2013. Does this mean my exemption is now over and if I sell next year which will I be paying 1/5 of cgt

    I assume they can’t renege on the final 3 years of the relief, so you’d pay no CGT if you sold this year, next year or the year after.
    It seems to me that this is simply a break clause, which you don’t have to go for.

    There’s probably plenty people with €150k gains in their back pocket over the past 4 years who would be happy to cut and run.
    Personally im only 3 years in.


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    #19
    ted1
    Registered Users Posts: 23,300 ✭✭✭✭ted1


    The_Conductor wrote: »
    karenalot wrote: »
    Wonder if we will see an increase in properties for sale next year - perhaps landlords or speculators will sell up earlier than expected?

    Potentially good news for buyers but bad news for renters as they could be evicted to facilitate the sales. It might also bring some vacant properties and land onto the market.

    Time will tell- however, I suspect the scheme to allow landlords surrender houses in negative equity- will have a far bigger impact that this.
    There’s not many properties in any of the cities that are in negative equity . It’s nearly ten years since the crash , so between mortgage pay down and rising prices most people are covered


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    #20
    hometruths
    Registered Users, Subscribers Posts: 5,798 ✭✭✭hometruths


    ted1 wrote: »
    There’s not many properties in any of the cities that are in negative equity . It’s nearly ten years since the crash , so between mortgage pay down and rising prices most people are covered

    Plenty of people have not bothered to pay their mortgages over the last 7/8 years - they're still deep in negative equity. Probably no problem as they'll get a deal.


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    #21
    DL Man
    Registered Users Posts: 7 ✭DL Man


    Hi,
    I bought my invest property in mid 2014 and I am selling it this year.
    Will I be cgt exempt given that this will be five and a half years ownership?

    Also, do you know how I get about regularising this with revenue. Is there a special form that covers this exemption that should be submitted?

    Thanks.


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    #22
    august12
    Registered Users Posts: 1,275 ✭✭✭august12


    DL Man wrote: »
    Hi,
    I bought my invest property in mid 2014 and I am selling it this year.
    Will I be cgt exempt given that this will be five and a half years ownership?

    Also, do you know how I get about regularising this with revenue. Is there a special form that covers this exemption that should be submitted?

    Thanks.
    My understanding is, yes you are exempt if you acquired between 7th dec, 2011 and 31st dec. 2014, the requisite holding period has been reduced from 7 years to 4 years . The measure has created a 3 year period i.e years 4 to 7 in which the property can be sold and benefit from a full exemption . This rule applies from 1st Jan 2018, I got this info from Grant Thornton website, a google search will give you more info, not sure re CGT return,


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    #23
    jazzyt
    Registered Users Posts: 27 ✭jazzyt


    Hi. Just wondering could someone elaborate on what exactly “acquired” refers to? Would this include inheriting a property or just purchasing a property? Myself and my sister were left the family home in my mams will when she passed away in may 2014. We both had our own homes so we have it rented it since then. We are considering selling this year so would we be exempt from Cgt as we are within the 7 year time frame? Property was valued at 110k at inheritance and valued at 215k today. Any help would be greatly appreciated. Thank you.


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    #24
    august12
    Registered Users Posts: 1,275 ✭✭✭august12


    jazzyt wrote: »
    Hi. Just wondering could someone elaborate on what exactly “acquired” refers to? Would this include inheriting a property or just purchasing a property? Myself and my sister were left the family home in my mams will when she passed away in may 2014. We both had our own homes so we have it rented it since then. We are considering selling this year so would we be exempt from Cgt as we are within the 7 year time frame? Property was valued at 110k at inheritance and valued at 215k today. Any help would be greatly appreciated. Thank you.
    I'm not sure if you need to have purchased the property, see this info as it mentions both purchased and acquired, difficult to know if acquiring through inheritance qualifies, I would contact Revenue through 'my revenue' account , at least you will have an answer in writing from them.

    https://www.grantthornton.ie/insights/factsheets/budget-2018--7-year-relief-capital-gains-tax/

    According to this, not eligible, but I would still get a definite answer from Revenue or check the revenue site.

    https://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html


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    #25
    jazzyt
    Registered Users Posts: 27 ✭jazzyt


    Hi. Thanks for your response.

    Looks like I’m clutching at straws. Did some digging and it would appear this exemption is not applicable to gifts or inheritances.
    But also found a file on the revenue website which states.....“ Where property is acquired from a relative (within the meaning of section 10 TCA 1997), the individual who acquired the property must have paid consideration amounting to at least 75% of the market value of the property at the time it was acquired in order to qualify for relief”

    So not sure exactly what that means so I’ll get I. Touch with revenue for clarification. But looks like I will be stumped with a €40k CGT bill of I sell! 😧


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    #26
    jazzyt
    Registered Users Posts: 27 ✭jazzyt


    jazzyt wrote: »
    Hi. Thanks for your response.

    Looks like I’m clutching at straws. Did some digging and it would appear this exemption is not applicable to gifts or inheritances.
    But also found a file on the revenue website which states.....“ Where property is acquired from a relative (within the meaning of section 10 TCA 1997), the individual who acquired the property must have paid consideration amounting to at least 75% of the market value of the property at the time it was acquired in order to qualify for relief”

    So not sure exactly what that means so I’ll get I. Touch with revenue for clarification. But looks like I will be stumped with a €40k CGT bill of I sell! 😧

    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03a.pdf


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    #27
    Woshy
    Registered Users Posts: 1,429 ✭✭✭Woshy


    jazzyt wrote: »
    Hi. Thanks for your response.

    Looks like I’m clutching at straws. Did some digging and it would appear this exemption is not applicable to gifts or inheritances.
    But also found a file on the revenue website which states.....“ Where property is acquired from a relative (within the meaning of section 10 TCA 1997), the individual who acquired the property must have paid consideration amounting to at least 75% of the market value of the property at the time it was acquired in order to qualify for relief”

    So not sure exactly what that means so I’ll get I. Touch with revenue for clarification. But looks like I will be stumped with a €40k CGT bill of I sell! ��

    It is probably worth reaching out to a tax accountant. There are things you can write off. I was surprised that the CGT we owed was lower than expected once I had gone through everything with him.


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    #28
    august12
    Registered Users Posts: 1,275 ✭✭✭august12


    jazzyt wrote: »
    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-07-03a.pdf
    I've read that and I think it means if house was valued at 200,000 when you acquired it, then in order to qualify for the relief, you would have paid the relative 150,000 i.e. 75% of the value, maybe someone more knowledgeable than me might clarify this.


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    #29
    jazzyt
    Registered Users Posts: 27 ✭jazzyt


    Woshy wrote: »
    It is probably worth reaching out to a tax accountant. There are things you can write off. I was surprised that the CGT we owed was lower than expected once I had gone through everything with him.

    Yes I think that would be a good idea. I know we can claim legal fees from when we acquired the house plus If we sell it. Also the estate agent fees. Will be interesting what other hidden expenses we can write off!


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    #30
    jazzyt
    Registered Users Posts: 27 ✭jazzyt


    august12 wrote: »
    I've read that and I think it means if house was valued at 200,000 when you acquired it, then in order to qualify for the relief, you would have paid the relative 150,000 i.e. 75% of the value, maybe someone more knowledgeable than me might clarify this.

    That’s kinda what I was thinking too. I will mention it again when we are selling just to make sure.
    Thanks!


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