# Avoiding CGT on Investment property



## FillSpectre (6 Jun 2006)

A friend of mine was thinking that they may sell their old investment property and buy two new ones. THe older property is old and requires a lot of maintenece hence he wants to sell to get less work. 

He is worried about CGT as he it would be over €120k. He is under the beleif that if he moves out of his home, rents that out and moves into the investement property he will be able to claim that as his residence. He is then free of CGT if he stays a year before selling is his belief. Is this right?

I thought there was a way of selling your assets to reinvest without paying CGT is there?


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## ubiquitous (6 Jun 2006)

FillSpectre said:
			
		

> He is under the beleif that if he moves out of his home, rents that out and moves into the investement property he will be able to claim that as his residence. He is then free of CGT if he stays a year before selling is his belief. Is this right?



No




> I thought there was a way of selling your assets to reinvest without paying CGT is there?


No


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## howareya (6 Jun 2006)

FillSpectre said:
			
		

> He is worried about CGT as he it would be over €120k.


 
Is he making over 600,000 profit on the sale.  has indexation been used to calculate the CGT.


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## FillSpectre (6 Jun 2006)

Thanks for the explanantion. 

Anybody else replying, could you actually explain how the residency clause won't apply. As far as I can see you don't pay CGT on your home and  residency does appear to only require a year of living there. It sounds too simple to me but does anybody know more and willing to explan it?


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## FillSpectre (6 Jun 2006)

howareya said:
			
		

> Is he making over 600,000 profit on the sale.  has indexation been used to calculate the CGT.



Yeap


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## CCOVICH (6 Jun 2006)

You cannot have more than one PPR ('home') at any given time.


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## ubiquitous (6 Jun 2006)

FillSpectre said:
			
		

> Thanks for the explanantion.



Sorry for disappointing you, but you didn't ask for an explanation.

I could  myself every time someone asks a question here that already has been answered many times - especially as it is very easy to find these answers by using the Search facility.


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## FillSpectre (6 Jun 2006)

ubiquitous said:
			
		

> Sorry for disappointing you, but you didn't ask for an explanation.



I also didn't ask anybody to blunt,rude or ignornat but you felt that was what I wanted.


			
				ubiquitous said:
			
		

> I could  myself every time someone asks a question here that already has been answered many times - especially as it is very easy to find these answers by using the Search facility.



I used search and haven't found anything. I wanted information if you don't want to help just go away. NO. NO is of no help. Thank you but no thank you for any further help from you is needed or wanted.


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## FillSpectre (6 Jun 2006)

CCOVICH said:
			
		

> You cannot have more than one PPR ('home') at any given time.



That is why he plans on renting out his current home when living in his current rental. Sorry if that wasn't clear


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## FillSpectre (6 Jun 2006)

from the tax office

"The exemption is also restricted where the taxpayer has not lived in the house for long periods.
However, a period of up to twelve months immediately before the end of the period of ownership is
treated as a period of occupation even though the owner may not have been actually living in it during
that period."

THis is the bit my firend believes means he can become exempt from CGT if he lives there for a 1 year and rents his other house

on page 15

http://www.revenue.ie/leaflets/cgt1.pdf


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## Satanta (6 Jun 2006)

That single year is treated as a period of occupation, he's still due the other years of ownership on the property at investor levels.

Look here for a brief explanation... http://www.askaboutmoney.com/showthread.php?t=29620&highlight=cgt


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## CCOVICH (6 Jun 2006)

FillSpectre said:
			
		

> from the tax office
> 
> "The exemption is also restricted where the taxpayer has not lived in the house for long periods.
> However, a period of up to twelve months immediately before the end of the period of ownership is
> ...


 
If you read the entire section on PPR relief in that leaflet carefully you will see that this is a non-runner.


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## ubiquitous (6 Jun 2006)

FillSpectre said:
			
		

> I used search and haven't found anything.



If you had input "Avoiding CGT on Investment property" into the AAM search function you would have yielded the following results:

including this one http://www.askaboutmoney.com/showthread.php?t=11593 "Investment property becomes PPR"



			
				FillSpectre said:
			
		

> blunt,rude or ignorant...


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## FillSpectre (6 Jun 2006)

CCOVICH said:
			
		

> If you read the entire section on PPR relief in that leaflet carefully you will see that this is a non-runner.



I have and I still am tending to agree with my friend. What are you exactly saying means he won't qualify? Section 5 seems to cover the residency are you talking about  somewhere else?


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## bazermc (6 Jun 2006)

In conclusion Fillspectre you cannot *Legally* avoid paying CGT on an *investment property* if you make a capital gain. The legislation on PPR relief is plugged very tightly to ensure it is not abused

On a second point do you not consider it fair that an investor should pay CGT if he/she makes a gain....when FTB's are struggling to get on the ladder as the bubble grows and grows due to speculators with substantial purchasing power


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## Pavlik (6 Jun 2006)

When referring to a particular part of a large PDF, you can link directly to a page using links like:

http://www.revenue.ie/leaflets/cgt1.pdf#page=5

Not a lot of people know that...


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## FillSpectre (6 Jun 2006)

bazermc said:
			
		

> In conclusion Fillspectre you cannot *Legally* avoid paying CGT on an *investment property* if you make a capital gain. The legislation on PPR relief is plugged very tightly to ensure it is not abused
> 
> On a second point do you not consider it fair that an investor should pay CGT if he/she makes a gain....when FTB's are struggling to get on the ladder as the bubble grows and grows due to speculators with substantial purchasing power



In conclusion from what? I am not aware of anybody actually clarifying the situation when did that happen?

Nobody really mentioned the second issue. Which I believe is possible through reinvestement but only appears to off put CGT untill later

On your point I didn't ask for a moral judgement plus what how does CGT paid by my friend help FTBs?


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## CCOVICH (6 Jun 2006)

FillSpectre said:
			
		

> I thought there was a way of selling your assets to reinvest without paying CGT is there?


 
I'm not sure if it still exists, but what you are referring to is rollover relief, and it would have only have extended to assets used in the course of a trade or profession, not to investment properties.


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## ubiquitous (6 Jun 2006)

FillSpectre said:
			
		

> Nobody really mentioned the second issue. Which I believe is possible through reinvestement but only appears to off put CGT untill later



I actually answered this for you, and told you that reinvestment relief (technically called rollover relief) is NOT available, but instead of reading my reply you attacked me for being "blunt,rude & ignorant"


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## Niall M (6 Jun 2006)

Rollover relief ended a number of years ago, you cannot avail of that.


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## FillSpectre (6 Jun 2006)

Thanks for the helpful information guys


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## darag (6 Jun 2006)

> In conclusion from what? I am not aware of anybody actually clarifying the situation when did that happen?


You and your friend have completely misread that section.  It states that you can move out of your PPR for up to a year before it is sold and still have it considered your PPR.  It DOES NOT MEAN you can move into an investment property for a year before sale and have the property considered your PPR for CGT purposes.

The idea of course is to not penalise someone if it takes a while to sell their PPR but they need to move straight away.


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## therave (6 Jun 2006)

hi, i recently sold a property and investigated the cgt on this sale.on the revenue site i remember seeing that if you sell the property and re-invest the money back into another property then there is no cgt payable,but i don't have the link to hand and i thknk professional advice from an account would be best


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## dam099 (6 Jun 2006)

therave said:
			
		

> hi, i recently sold a property and investigated the cgt on this sale.on the revenue site i remember seeing that if you sell the property and re-invest the money back into another property then there is no cgt payable,but i don't have the link to hand and i thknk professional advice from an account would be best


 
It might be possible that using the search facility might have thrown up a link to some old out of date document about roll-over relief. I'm not sure how diligent Revenue are about deleting or flagging out of date data when a newer publication exists but the rollover relief was effectively abolished in 2002. 

In fact the current CGT1 document does refer to roll-over relief (see chapter 9) but states it is no longer available for disposals since 3/12/2002. _The reason it appears to be in there seems to be because there is a very limited application of these provisions allowing for gains on disposals prior to this dates which were rolled over due to reinvestment to continue to be rolled over if the subsequently purchased asset is sold and the proceeds continue to be reinvested but it only applies to the original gain deferred pre 3/12/2002 and not to any additional gains on the subsequent assets. This is largely irrelevant here as given the facts outlined by the OP this would not apply._


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## bazermc (7 Jun 2006)

FillSpectre said:
			
		

> On your point I didn't ask for a moral judgement plus what how does CGT paid by my friend help FTBs?


 
I know you didn't ask for my moral judgement but I gave it anyway becouse it just bugs me when people make a shed load of money on property and spend hours trying to find a loophole in the PPR legislation that does not exist.  In fact the particular section has been amended 5 times since CGT was first introduced (1975) and has been the subject of approx 15 court cases both in UK and Ireland.  On the other hand you have FTB's struggling to get on the ladder.  Obvisiously CGT paid by friend does not directly help FTB's, it is just about equality in the tax system.

Lastly regarding roll over relief it was abolished in December 2002.


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## CCOVICH (7 Jun 2006)

Keep it on topic please and save moral judgements for Letting off Steam please.

No more on the issue-thanks.


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## FillSpectre (7 Jun 2006)

bazermc said:
			
		

> I know you didn't ask for my moral judgement but I gave it anyway becouse it just bugs me when people make a shed load of money on property and spend hours trying to find a loophole in the PPR legislation that does not exist.  In fact the particular section has been amended 5 times since CGT was first introduced (1975) and has been the subject of approx 15 court cases both in UK and Ireland.  On the other hand you have FTB's struggling to get on the ladder.  Obvisiously CGT paid by friend does not directly help FTB's, it is just about equality in the tax system.
> 
> Lastly regarding roll over relief it was abolished in December 2002.




I hope it keeps on bugging you becasue those who stand in judgement like yourself deserve to be bothered by there own wild assumptions and views. My friend has paid a lot of tax over the years and kept the economy going when others in the 70s and 80s evaded tax. This was a question about a legal approach to holding on to a profit which he already paid tax on many times over the years while renting to a local authority. He'll keep his house and continue to provide a service. He wanted to reorgainse his assets and didn't feel like paying tax to do that. Can you tell me why you think a 70 year old man can't reorgainse his pension  without paying €120k to do so?

I'm sure you have paid every thing due to moral good rather than rules but others don't have to hence there are rules.


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## CCOVICH (7 Jun 2006)

Fine.

Thread locked.


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