I hope to move back home pretty soon and will be selling my place in Dublin. I will loose a substantial amount of money due to the fall in the property market in the last few years. Is there anything that this loss can be offset against? If there is then is there a time limit within which you can offset the loss
Can I claim CGT loss on sale of my home?
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tenchi-fan
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Re: Loss on Sale of Home
Hi. A capital loss can be offset against a capital gain in future years. So you can offset your loss against future profits from property or shares.
Hi. A capital loss can be offset against a capital gain in future years. So you can offset your loss against future profits from property or shares.
Re: Loss on Sale of Home
PPR's fall completely outside the tax net for CGT. You can't just pick and choose the bits you like.
Unlikely. Given that gains from the sale of a PPR don't attract Capital Gains Tax, it's highly unlikely that any loss could be subsequently offset against a future capital gain.
PPR's fall completely outside the tax net for CGT. You can't just pick and choose the bits you like.
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tenchi-fan
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Re: Loss on Sale of Home
argh you're right. sorry misread the original post the didn't realise op was living in the house being sold
argh you're right. sorry misread the original post the didn't realise op was living in the house being sold
Re: Loss on Sale of Home
I have paid 100k off the original house price but house is still in negative equity to the tune of about 30k. (Bought in Jan 07) I would probably be better off if I stay put. I would have to find the 30k plus a deposit on another house before I could buy down home. Will have to ask Brian Linehan to consider clowns like me in the next budget. 100k took a lot of saving over 5 years and to be left with nothing and no possibility of using it to reduce my tax liabilities is harsh.
I have paid 100k off the original house price but house is still in negative equity to the tune of about 30k. (Bought in Jan 07) I would probably be better off if I stay put. I would have to find the 30k plus a deposit on another house before I could buy down home. Will have to ask Brian Linehan to consider clowns like me in the next budget. 100k took a lot of saving over 5 years and to be left with nothing and no possibility of using it to reduce my tax liabilities is harsh.
Re: Loss on Sale of Home
Actually, a loss on PPR can be offset/carry fwd against other CGT liabilities.
It would, however, need to be a monetary loss and not an indexed loss i.e. you must sell for less ?? than you bought. You arent allowed to use indexation on the purchase price (say if you bought 10yrs ago) to create the loss.
Your PPR is technically liable to CGT but the ppr relief given covers most peoples liability.
Actually, a loss on PPR can be offset/carry fwd against other CGT liabilities.
It would, however, need to be a monetary loss and not an indexed loss i.e. you must sell for less ?? than you bought. You arent allowed to use indexation on the purchase price (say if you bought 10yrs ago) to create the loss.
Your PPR is technically liable to CGT but the ppr relief given covers most peoples liability.
Brendan Burgess
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Re: Loss on Sale of Home
Hi Leaky
Can you quote an authoratitive source for this? For example, a link to a Revenue document which says this.
Brendan
Hi Leaky
Can you quote an authoratitive source for this? For example, a link to a Revenue document which says this.
Brendan
Re: Loss on Sale of Home
Hi Leaky,
Thanks for that leaky1. As Brendan says a source would help to clarify this. I have not been able to find any. It would be a monetary loss as I had planned to sell up. What investments qualify as a Capital gain? (Shares, Property, etc..) Is there a time limit before which I can claim this gain. It would take quite a while and a lot of work to generate a capital gain of 100k in todays world.
Hi Leaky,
Thanks for that leaky1. As Brendan says a source would help to clarify this. I have not been able to find any. It would be a monetary loss as I had planned to sell up. What investments qualify as a Capital gain? (Shares, Property, etc..) Is there a time limit before which I can claim this gain. It would take quite a while and a lot of work to generate a capital gain of 100k in todays world.
Re: Loss on Sale of Home
I don't have a link to a source on this unfortunately, but will have a look around for something and post back.
I did get this answer from Revenue recently, it was explained as I posted before and clarified that up to now (typically) people have not been making monetary losses on their PPR's so this query hadn't arisen a lot.
Brendan, would this query benefit from being moved to the Taxation forum?
Might get some positive feedback from accountants who post there.
I don't have a link to a source on this unfortunately, but will have a look around for something and post back.
I did get this answer from Revenue recently, it was explained as I posted before and clarified that up to now (typically) people have not been making monetary losses on their PPR's so this query hadn't arisen a lot.
Brendan, would this query benefit from being moved to the Taxation forum?
Might get some positive feedback from accountants who post there.
Brendan Burgess
Founder
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- 52,177
Hi Leaky
I don't think you are correct.
If you live in your home as your PPR for the entire period you own it, you cannot use the loss for CGT purposes.
However, if you let the home for 50% of the time you own it, you can claim 50% of the losses. Could this be what you are thinking about?
I don't think you are correct.
If you live in your home as your PPR for the entire period you own it, you cannot use the loss for CGT purposes.
However, if you let the home for 50% of the time you own it, you can claim 50% of the losses. Could this be what you are thinking about?
Thanks for moving this to Taxation.
My reasoning for thinking the loss is allowable is as follows.
A house (either PPR or non-PPR) is a chargeable asset for CGT. A list of non-chargeable assets is available on Revenue website in their leaflet CGT1 Guide to CGT, and it does not mention a PPR as a non-chargeable asset.
CGT does in fact apply to the sale of your PPR, it's just that a measure of relief (ppr relief) is given against the tax due. The relief is apportioned to exempt the period of occupancy (plus 1-year deemed occupancy). A lot of people think their PPR is exempt from CGT but don't realise that the tax is simply reduced by the ppr relief.
The first step in calculating PPR Relief is to calculate the gain on the disposal. When the gain has been established, the next step is to calculate the period of occupancy as a percentage of the period of ownership. If you owned the property for 10years and your total occupancy is 8years then your PPR Relief is against 8/10ths of the gain.
So, if your first step in calculating PPR relief is to establish the gain then if you make a loss on the sale of the property surely you do not need to proceed any further in the calculation - you have made a loss.
The loss itself would need to be a monetary loss. If indexation is used to arrive at a 'loss' figure then this is not an allowable loss as it is a no gain/no loss situation. Simply put, I think that if you buy a house for 300,00k and sell it for 200,000k then you have made a monetary loss of 100,000k.
Sorry, this was longer than I thought. I am open to correction and would like to hear other opinions on it.
Yes but to my mind if you are trying to calulate a cgt loss you would have to apply the PPR relief in a similiar manner as you would in order to calculate a CGT gain!
S546(3) of the taxes acts states that the provisions of the Capital Gains Tax Acts that relieve chargeable gains will also apply in calculating allowable losses unless another treatment is expressly provided for. Therefore I would think that a loss on disposal of a PPR would be reduced accordingly.
Brendan Burgess
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Thanks Breninio for that factual reference.
So just to make absolutely clear, you can not set a loss on your home against profits made elsewhere for CGT purposes. if the property was rented out for some of the period, you can set a portion of the loss against other Capital Gains.
So just to make absolutely clear, you can not set a loss on your home against profits made elsewhere for CGT purposes. if the property was rented out for some of the period, you can set a portion of the loss against other Capital Gains.
I can't see anywhere in S604 where it says you have to claim PPR relief. S604(3) states that "the gain shall not be chargeable if ............". As a result, my view would be that S546(3) would also apply to restrict the loss i.e. a claim is not necessary.
I have never seen it in practice, but based on my reading of the legislation, if a loss arises on a property that was PPR for only part of the period of ownership, then a portion of that loss (calculated in accordance with normal PPR rules) would be available for offset against other gains or carry forward. I suppose this is a tax issues we will be facing more and more in the "new" ireland. Only a short while back, losses on the disposals of PPRs would have been a very rare occurence.
I have never seen it in practice, but based on my reading of the legislation, if a loss arises on a property that was PPR for only part of the period of ownership, then a portion of that loss (calculated in accordance with normal PPR rules) would be available for offset against other gains or carry forward. I suppose this is a tax issues we will be facing more and more in the "new" ireland. Only a short while back, losses on the disposals of PPRs would have been a very rare occurence.
In that case so my best bet would be to rent out the house rather than selling it when I move home. If it is rented for 5 years or so (I have lived in it for 3) then any CGT gains I make can be offset against 5/8ths of the loss when I do sell the property. Am I understanding you correctly.
Not quite as simple as that I'm afraid. Even taking the unkown factors out of your suggested plan (e.g what will the value of the property be in 5 years, will you have other chargeable gains against which you can offset a loss), the fact that you are leaving Ireland will complicate matters. You will need to look at the treatment of the loss under rthe tax rules of the country you are moving to. For Irish CGT purposes, the disposal of property in the State will be a CGT event irrespective of where you move to as it is a specified asset. However if you are non resident and non ordinarily resident at the time of disposal it will only be gains from the disposal of other specifuied assets that may be offset for Irish CGT purposes. What you will need to do is look at the equivalent rules in your new country of residence to dtermine the treatment of the disposal under their rules and the avilability of any loss for offset against gains.
Thanks Breninio
I am not moving country, only moving to the other end of this one. Irish born. At the moment similar houses to mine are selling for 240k. Thats 125K less than I paid and I doubt any recovery will see me back to those prices. I do realise there are imponderables (ie I need to have CGT income and I need to realise the loss) but I was just wondering what the tax position is.
I am not moving country, only moving to the other end of this one. Irish born. At the moment similar houses to mine are selling for 240k. Thats 125K less than I paid and I doubt any recovery will see me back to those prices. I do realise there are imponderables (ie I need to have CGT income and I need to realise the loss) but I was just wondering what the tax position is.