Can I claim CGT loss on sale of my home?
- Thread starter What the
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I may to totally wrong about this but I understood that, in respect of Capital Gains tax, if one was selling a PPR that had been rented out for a portion of the time owner, the capital gains was calculated from the time the property was first rented until it ceased being rented, rather than from the time the property was first bought until it ceased being rented? I.e. I buy a house in 2002 for 100,000 and live in it as my PPR. In 2004, I move abroad and rent it out - it becomes an investment property liable for CGT and is now worth 200,000. I return in 2007, with my house now worth 300,000 and decide to sell. My liaibilty for CGT is based on the difference between the 2004 and the 2007 price i.e. 100 grand and not the 2002 and 2007 price i.e. 200 grand.
If this is the case, does Capital Gains loss not work the same way? I.e. house bought for 300 grand in 2007, rented out in 2010 when it is now worth 150 grand, sold in 2015 when it is still worth 150 grand (let's say for conjectures sake ...). individual now unable to carry forward capital gains loss as there was none for the time the property was an investment?
If this is the case, does Capital Gains loss not work the same way? I.e. house bought for 300 grand in 2007, rented out in 2010 when it is now worth 150 grand, sold in 2015 when it is still worth 150 grand (let's say for conjectures sake ...). individual now unable to carry forward capital gains loss as there was none for the time the property was an investment?
Brendan Burgess
Founder
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You are almost totally wrong.
The gain or loss is calculated from the time of ownership to disposal.
It is then apportioned over the period during which it was not your PRR.
It does not matter when the gains or losses arose.
For example:
purchased|1/1/2000|100
Let|1/1/2005|value 300
sold|1/1/2010|value 150
The gain is €50 and you pay CGT on half of this.
You don't get a tax free gain of €200k on your ppr and then a tax loss of €150 for CGT purposes.
It may be unfair, but that is how it's calculated.
The gain or loss is calculated from the time of ownership to disposal.
It is then apportioned over the period during which it was not your PRR.
It does not matter when the gains or losses arose.
For example:
Let|1/1/2005|value 300
sold|1/1/2010|value 150
The gain is €50 and you pay CGT on half of this.
You don't get a tax free gain of €200k on your ppr and then a tax loss of €150 for CGT purposes.
It may be unfair, but that is how it's calculated.
Interesting, thanks Brendan
Rather worryingly in retrospect, this was the advice I was given by a (recently) qualified tax accountant in 2007 in respect of my ppr which I had bought in 2004, rented out in 2006 upon moving abroad and was pondering selling in the future.
All immaterial now, as my house is currently worth less than it was bought for in 2004 and I'm not selling
Rather worryingly in retrospect, this was the advice I was given by a (recently) qualified tax accountant in 2007 in respect of my ppr which I had bought in 2004, rented out in 2006 upon moving abroad and was pondering selling in the future.
All immaterial now, as my house is currently worth less than it was bought for in 2004 and I'm not selling
Wow txirimiri, you are correct that it is worrying that you could get advice that was so wrong from a qualified advisor. Just to note, if you were required to be abroad for reasons of employment, that period will also be a deemed period of occupation when calculating the tax free portion of any gain on a subsequent disposal.
Really? We were deducted trs because we were renting out our house while working abroad and it was therefore not considered our ppr. Seems strange therefore that it would be deemed an occupied ppr for the same time period if it were sold! Means that two different parts of Revenue are defining the same activity (i.e. not living in ppr and renting it out because required to work abroad) differently for tax purposes?
Brendan Burgess
Founder
- Messages
- 52,175
There is nothing odd about this. You received rental income and you claimed the interest paid on your mortgage against that in calculating the rental profit.
It is possible that your tax accountant gave you incorrect advice. However, it is far more likely that you misunderstood him.
Brendan
My point is not that its odd that we didn't receive trs while renting out our house - its perfectly logical.
My point is that Revenue are treating the same activity differently when assessing tax liability. If you are treated as an investor when renting out your house, even if it is your only residence, it seems odd that the same period is then treated by the same organisation as being a period of occupation in your ppr when assessing liability for CGT. I am not complaining about it as it is potentially to my advantage if in the future I sell my house for more than I paid for. I am pointing out that it is inconsistent on the part of the Revenue Commissioners.
I think I am capable of understanding advice from a tax accountant. I have received correct advice and incorrect advice from different accountants over the years.
My point is that Revenue are treating the same activity differently when assessing tax liability. If you are treated as an investor when renting out your house, even if it is your only residence, it seems odd that the same period is then treated by the same organisation as being a period of occupation in your ppr when assessing liability for CGT. I am not complaining about it as it is potentially to my advantage if in the future I sell my house for more than I paid for. I am pointing out that it is inconsistent on the part of the Revenue Commissioners.
I think I am capable of understanding advice from a tax accountant. I have received correct advice and incorrect advice from different accountants over the years.