CGT on flipping property

S

South

Guest
If I puy a house as an investment for (let's say) €300K in Jan 2008 and sell it in May 2008 for (let's say) €320K, I would have thought that I would liable for CGT on the €20K.

I note from The Irish Times last Friday that I would not be liable for any CGT, I'm surprised...did anybody else notice this?
 
South said:
I note from The Irish Times last Friday that I would not be liable for any CGT, I'm surprised...did anybody else notice this?
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Assuming the IT is correct which has not been the case in the past and, I suspect, is not the case here.
 
I would be inclined to think it is utterly incorrect.

However, I would be amazed that the Personal Finance editor of the major national newspaper could make such a basic blunder.
 
South said:
However, I would be amazed that the Personal Finance editor of the major national newspaper could make such a basic blunder.
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They have made extremely basic mistakes on tax and other issues in the past.
 
I am not doubting that, can anyone confirm/deny whether this was a blunder?
 
Sorry - just re-read the original post and this is not "flipping" as normally understood (i.e. selling on a new property or the contract immediately without ever living there) as the person buys in January, presumably lives there and then sells on in May so they would be an owner occupier and exempt from CGT (unless they do this over and over again). As long as a property is genuinely your PPR and you are not actually doing this sort of selling on habitually then there is no time limit on when owner occupier CGT exemption kicks in.
 
No it is an investment so it is buying and selling.

The IT said that the last year before sale is ALWAYS treated as owner-occupier so not liable for CGT even for an investment property...this sounds unlikely to me.
 
South said:
No it is an investment so it is buying and selling.
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Doh! :eek: Sorry - I will revert to my original opinion so...
The IT said that the last year before sale is ALWAYS treated as owner-occupier so not liable for CGT even for an investment property...this sounds unlikely to me.
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Sounds totally wrong to me too.
 
Some people could have ten properties for sale at once, I don't see how they could have ten PPRs for that last year before sale!
 
I think this is another case of hearing what you want to hear.

However in your example you would also have the expense of stamp duty, solicitors fees and estate agent fees. An annualised return of 13.3% in 6 months is also completely unrealistic in the current environment. So fortunately for you you would have no CGT liability by virtue of the fact that you would have no capital gains to pay tax on.
 
It is a made-up example (please see dates are next year) that I created based on what I read in the paper...not based on hearing what I want to hear.
 
The article in the IT was based on the premise that the property was the PPR of the owner. The tax treatment of a PPR and an investment property in Ireland are completely different, so taking an example which assumes a property to be a PPR and then applying the conclusions from it to an investment property is indeed hearing what you want to hear.
 
The reply to a letter specifically stated that the same treatment applied to any investment property.

Of course the tax treatment of a PPR and investment property are different, hence why I raised the query.

I do not want to hear anything, especially not you telling me what I want to hear.
 
I saw the piece in the Times as well and was surprised at what they were saying. In fact they were confirming what they had written previously to a reader that had exactly the same query as you South. What was said that with any property, regardless if you ever lived in it or always held it as an investment property, for the last 12 months of ownership it will always be deemed to be your PPR. So based on that you could have been buying and selling properties within 12 months and have no CGT liability. I have my doubts.
 
I do not have a query - I created a fictitious example based around what was written in The Irish Times, it definitely does not sound correct!
 
Christy said:
What was said that with any property, regardless if you ever lived in it or always held it as an investment property, for the last 12 months of ownership it will always be deemed to be your PPR. So based on that you could have been buying and selling properties within 12 months and have no CGT liability. I have my doubts.
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This is certainly not correct in the general case. If I own a PPR and then buy and resell an investment property within a 12 month timeframe I cannot claim PPR CGT exemption on the latter because I can only have one PPR at a time. Similarly if I live in rented accommodation and buy and resell an investment property within a 12 month time frame then PPR CGT exemption is irrelevant since the property simply is not my PPR. If the IT literally said this then they are wrong. Maybe somebody could post what exactly was published?
 
That is what they said, I will dig up the paper at home this evening.

I was stunned because my accountant never pointed this out when I sold an investment property within 12 months!
 
Your accountant was right.

Section 604 of the Taxes Consolidation Act, 1997 (which grants the PPR relief) applies only to "a dwelling house or part of a dwelling house which is or has been occupied by the individual as his or her only or main residence".

Therefore, the sub-section which deems PPR status for the last 12 months of ownership does NOT apply to property which was always an investment property.
 
Thanks Nige.

I will copy the text from The IT as soon as I get my hands on it.
 
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