When does CGT kick in

M

Modestus2418

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I am moving out of my PPR personal private residence into a rented property which I am about to renovate when the tenants leave in next few months.Do I have to sell my original PPR within a specific time period to avoid CGT and secondly do I have sold my original PPR before I move into the previously rented property and make it my new PPR? Should I get the rented property valued by an auctioneer /valuer before I carry out the renovations so that I can show the pre renovation valuation to the Revenue Commisioners along with cost of the renovations to reduce any further CGT liability on the newly renovated PPR should I decide to sell my new PPR in a few years.I never lived in the rented property and it has been rented for about 18 years so any CGT Liability would be substantial if I do not set off the renovation costs against CGT liability should I decide to sell the renovated property in the future.Any advice appreciated
 
Principle Private Residence Relief works by exempting from Capital Gains Tax any periods that a property was used as your PPR.

So for house 1 if your lived in it for the entire period you owned it then that period is exempt. A further 12 months is exempt to give people time to dispose of the property. So if you lived in it for 15 years and then rented it for 5 the total period is 20 years with 4 years exempt any gain would be taxed at 4/20.

The new property will be your PPR for x number of years it's current value is irrelevant. Again the gain will be exempt for the period that you lived in it.

So if you owned it for 30 years 12 would be exempt so the gain would be taxed at 18/30.
 
Thanks for that Joe 90.I have a general idea of what qualifying enhancement and acquisition costs from reading the Revenue guidelines on CGT allowances however the circumstances surrounding the acquisition of this rental property were unusual in that my wife acquired it under a Will from a non relative and I know we paid Capital Acquistions TAx in order to get title.I assume the CAT paid can also be set off against CGT in the invent of a future sale.I am unclear whether Indexation applies in the allowance of Renovation costs to be set off against CGT? Does indexation not apply in every case ?
 
CAT is not allowed against CGT.

The way it works is that the base cost is the value ascribed to the when it was inherited.
 
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