(another) Capital Gains Query

C

Cerberus

Guest
We moved into a new house last Novemeber and let our original house. The value of the original house when purchased was €210,000. The current market value is about €375,000, say a gain of €165,000. I believe if we sell the house within one year we are not liable for capital gains tax as ir was our principal residence.

What I am trying to determine is the amount of capital gains tax we shall owe if we choose to keep the house. If we ignore allowable deductions is the tax owed 20% of the full gain, i.e. 20% of €165,000?
 
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Maybe some one else can clarify, but once you have let out your origional house how can it still be your PPR, surely now it is an investment prop liable to income tax under Case V and very much liable to CGT on the gains.

However you will receive relief for the period of ownership you owned the house as your PPR.

So if for example you bought the house in 2000 and sold it in 2010 you lived in the house as your PPR for five years. You would divide your gain by half and multply it by 20%.
 
Cerberus said:
I believe if we sell the house within one year we are not liable for capital gains tax as ir was our principal residence.
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That's correct..

So if for example you bought the house in 2000 and sold it in 2010 you lived in the house as your PPR for five years. You would divide your gain by half and multply it by 20%.
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I think you will divide the gain by 10 and multiply by 4... (5 year PPR + 1 extra year because of above)
 
Thanks. I see the light. So if it was my PPR half of the time I owned the property I am liable to pay half of the 20% CGT on the full gain. So 10% of €165,000 in this example.
 
No, to be pedantic, it's 20% CGT on half of the gain - comes to the same thing in this case of course.
 
jpd said:
No, to be pedantic, it's 20% CGT on half of the gain - comes to the same thing in this case of course.
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To be even more pedantic,
if you lived in it for half the time (five years in the example) you'd be paying 20% on 4/10ths of the gain.

All figures in years....
[(Total time) - (Time in the house + 1 year [for the final 12 month allowance])]/(Total time)

[10 - (5 + 1)]/10 = 4/10

So if your gain is €X
You pay X*4/10 (Non PPR time)*.2 (20% CGT)

(Above details are very rough!)
To look at any of the further details on calculating the "Gain" used in these calculations check out the Revenue CGT details. The cost of disposal (and conveyancing), expenditure incurred for the purpose of enhancing the property etc. can all be used to reduce the CGT due.
You also have the €1270 CGT exemption to consider.
 
So looks like the first year it is not my PPR is a freebie in terms of CGT.
Thanks
 
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