PPR Relief on family home

C

Calico

Registered User
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Hi All,

Hopefully someone can answer my question(s). I benefited from PPR relief on the family home with respect to CAT subject to revenue's conditions. One of them is that I must reside in the dwelling-house for 6 years from the date of the gift or inheritance. The actual words are:

the recipient must continue, except where such recipient was aged 55
years at the date of the gift or inheritance or has died, to occupy that
dwelling-house as his or her only or main residence for a period of
6 years commencing on the date of the gift or inheritance. Where the
dwelling-house is directly or indirectly replaced by other property, this
condition may be satisfied where the recipient continuously occupied
both properties as his or her only or main residence for a total period of
6 out of the 7 years commencing on the date of the gift or inheritance.
A recipient absent during any time through working abroad is
considered to remain in continuous occupation of that dwelling-house.


Note: If the dwelling house or any part thereof is sold or otherwise
disposed of within six years of the date of gift or inheritance the exemption
from tax may be withdrawn.

My questions:

- Can I sell the dwelling house and buy a replacement dwelling house somewhere else provided I meet the '6 out of 7 years' requirement? I've highlighted that part in bold because I am unsure of how to interpret it as in I would interpret that to mean that you can replace the PPR with another PPR but that interpretation seems to conflict with the note at the end.

- Am I precluded from buying an investment property for the 6 year period? For example, am I allowed to buy a studio apartment & let it out, with the intention of moving there once 6 years has passed?

- If the answer is no to the above, and I sell anyway, am I liable to pay for the full 20% tax relief or only a weighted portion of it? (it has been almost 2 years since the date of gift/inheritence)

- I presume, as I have a property I have forfeited my first time buyer status and benefits?

Thanks in advance - I hope there is someone on here with a legal background that might know.

Cali
 
Hi Cali:

Can I sell the dwelling house and buy a replacement dwelling house somewhere else provided I meet the '6 out of 7 years' requirement? I've highlighted that part in bold because I am unsure of how to interpret it as in I would interpret that to mean that you can replace the PPR with another PPR but that interpretation seems to conflict with the note at the end.
Click to expand...

Yes- you can sell and use the proceeds to buy another PPR without a clawback.

Am I precluded from buying an investment property for the 6 year period? For example, am I allowed to buy a studio apartment & let it out, with the intention of moving there once 6 years has passed?
Click to expand...

You can buy an additional investment property- as long as you don't sell this property to buy it. So as long as you keep the original property- or sell the orig property and buy an alternative PPR- but keep this ppr you are free to buy an additional property any time you like.

If the answer is no to the above, and I sell anyway, am I liable to pay for the full 20% tax relief or only a weighted portion of it? (it has been almost 2 years since the date of gift/inheritence)
Click to expand...

Good question- I think the answer is the full amount- there is no pro rata clawback.

I presume, as I have a property I have forfeited my first time buyer status and benefits?
Click to expand...

That depends on whether it was a gift or inheritance. If it was an inheritance you can still claim FTB relief on a new property provided you fulfil the other FTB criteria for relief. However if it was a gift the following provision applies( from Revenue site):

The (FTB) relief can be claimed where the gift of the house was received prior to 22 June 2000 (or prior to 27 June 2000 in the case of part of a house). A gift received after the above date(s) is regarded as a prior purchase and would preclude a person from claiming the relief.
Click to expand...
 
Vanilla - thank you very much for answering my queries. Knowing that I can buy a second property and still claim FTB status is a big relief. The property was an inheritence and I have been living there since without considering the possibility of leaving because of the PPR Relief criteria. This has resulted in me not being able to find work locally and getting increasingly depressed as the loss (of my loved one - it was their home) is always in my face there. I thought initially I would just stick out the 6 years but now I'm not so sure. At least now I can consider other things.

One thing though, if I did buy something somewhere else would I have to leave it empty or rent it out? As in treated it as purely an investment property? I ask because, the PPR that I am claiming relief on is down the country where I can't find work so I would like to buy a studio somewhere closer to dublin and work there during the week. I guess, that could be construed as having 2 PPRs?

Thanks Again.
 
Calico said:
Knowing that I can buy a second property and still claim FTB status is a big relief.
Click to expand...
Does the FTB status definitely apply with respect to SD as well as owner occupier mortgage interest relief in this case?
 
Hi Cali, I'm sorry for your loss.

I'm not really sure that I have explained this fully to you, so I'll try again.

You can only have one PPR at a time.

If you don't want to use your present home ( which was an inheritance) as your PPR but want to buy in Dublin and use that as your PPR, then you have a choice:

1. Keep your present house and buy a new PPR in Dublin- if you do this you will be hit with the clawback for inheritance tax. But you will be regarded as a FTB for stamp duty purposes. And you can continue the balance of your 7 years of TRS on the new property.

2. Sell your present house and buy a new PPR in Dublin- no clawback, still a FTB for stamp duty, can still claim balance of TRS relief.

If you want to buy an investment property, this has nothing to do with your PPR- you cannot claim FTB relief on buying an investment property- even if it was your first time buying as you have to intend to occupy it as your PPR in order to avail of the relief. Also if you buy an investment property, then you have lost your FTB status forever. Does that explain it better?
 
ClubMan said:
Does the FTB status definitely apply with respect to SD as well as owner occupier mortgage interest relief in this case?
Click to expand...


Sorry ClubMan, didnt see that. Yes, it would seem so in this case as long as the OP doesnt have two PPRs- and as long as the OP actually intends to reside in the new property.
 
Thank you, that does explain it better but, I'm still a bit confused.:eek:

Regarding FTB status, am I right in thinking you can only avail of this when you have no other property interest? So the only 2 ways someone like me could ever be a FTB would be to sell now, pay clawback, buy new PPR as FTB OR wait out the 6 years, then sell, buy new PPR as FTB?

Forgetting about FTB status altogether, I undertand then that I can still buy an investment property and keep within the limits of the PPR Relief rules. If that is true, am I allowed to buy an investment property, leave it vacant and use it when I want to? Is this staying on the right side of the PPR Relief? Can I use the PPR as leverage for a mortgage to buy investment property?

And absolute last query, is it a reasonable argument to say that I cannot find employment where I live so have to live in Dublin in my investment property for work purposes and somehow keep everything legit? Part of the PPR relief implies there may be a bit of scope here:

The exemption will not be withdrawn where a breach of the condition
referred to at (c) above is as a result of the recipient requiring long term
medical care in a hospital, nursing home or convalescent home or as a
result of a condition being imposed by an employer on a recipient to reside
elsewhere.

Thanks again for the advice...:)
 
Calico said:
Regarding FTB status, am I right in thinking you can only avail of this when you have no other property interest? So the only 2 ways someone like me could ever be a FTB would be to sell now, pay clawback, buy new PPR as FTB OR wait out the 6 years, then sell, buy new PPR as FTB?
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Are you referring to the SD clawback or the inheritance tax clawback mentioned earlier?
Forgetting about FTB status altogether, I undertand then that I can still buy an investment property and keep within the limits of the PPR Relief rules. If that is true, am I allowed to buy an investment property, leave it vacant and use it when I want to? Is this staying on the right side of the PPR Relief?
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This makes no sense to me. A property is either an investment property or a PPR. It cannot be both - well, other than in the case of a live in landlord not availing of the rent a room scheme I guess? You cannot buy a property, leave it vacant and call it your PPR. You must be living there.
 
I was referring to the inheritence clawback. CAT exemption. Does SD get clawed back as well? Re. the investment property, can you not buy an investment property and leave it vacant? Do you have to have tenants for it to be an investment property? What if you can't find any? Can you not have an investment property and another property and just nominate 1 as your PPR?
 
Calico, to be honest, it has come to the stage that I don't really understand what you are asking anymore! Tell us what you want to do, in terms of buying a house, moving etc and we will tell you ( to the best of our ability) how this will affect you tax wise.
 
It's how I ask them, right?;)

Regarding FTB status, I think I'm clear on that. Basically, I don't want to sell the PPR (which I am claiming relief for) but I suppose, I needed to know the option was there because on a person level it is not really working for me.

What I would like to do - only if it is allowed and I don't get clawed-back on anything - is to buy a studio or something closer to Dublin. Ideally, I would like to use the PPR as security on a mortage to fund this and then either rent out the studio or leave it "empty" and use it myself when I need to. This could involve using it during the week for work purposes......I just can't get any consistent work where I am.

Am I allowed to do that?


If the answer is No, can I argue the case on these grounds?

"........or as a
result of a condition being imposed by an employer on a recipient to reside
elsewhere."

.........as I can't get work where I am?

Soz for all the confusion.
 
OK, that's clearer.

These are the options if you want to retain your present PPR:

1. Buy an investment property in Dublin- this does not cause a clawback ( as long as you retain your PPR and continue to use it as your PPR) BUT you are not entitled to FTB relief as you must intend to reside in the property as your PPR in order to obtain FTB relief. So you will have stamp duty to pay.

2. If you intend to buy a new PPR in Dublin and retain the property you already own, but rent it out, this will cause a clawback of the inheritance tax, but you will be regarded as a FTB for the Dublin property and therefore will pay reduced or no stamp duty depending on the price and whether it is new or old. Also you can transfer your TRS relief ( the balance of 7 years if you are already claiming it) to the new Dublin property.

3. Finally you could sell your present PPR, buy a new PPR in Dublin and an investment property. In this scenario if you need a new PPR due to work ( you could argue a good case here to the Revenue if you can't obtain work where you are) then you can argue your case before the time period is up to sell and have no clawback. You will have FTB relief on the new PPR and TRS relief ( or balance of). You could also buy an investment property- but as with all investment properties you will be liable to stamp duty and no TRS relief.
 
So can I buy an investment property in dublin, keep it empty, and use it myself, but not technically as a PPR, just somewhere to live during the week?
 
Yes you can, but you won't receive FTB relief in purchasing it AND it will mean you have forever lost your FTB status even if you purchase another PPR in the future.
 
Vanilla said:
2. If you intend to buy a new PPR in Dublin and retain the property you already own, but rent it out, this will cause a clawback of the inheritance tax, but you will be regarded as a FTB for the Dublin property and therefore will pay reduced or no stamp duty depending on the price and whether it is new or old. Also you can transfer your TRS relief ( the balance of 7 years if you are already claiming it) to the new Dublin property.
Click to expand...

Vanilla, I have one last question about this if you don't mind! If I waited-out the inheritance tax relief period (6 years) and then did 2. above can I just nominate the Dublin property as my PPR and claim FTB status (if it still exists at then)? Again, I probably wouldn't rent out the first PPR/family home but leave it empty & I know I would have to live in the new place for a number of years in order to satisfy the FTB relief condiitions. I'm just wondering.
 
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